The exchange rate forecast for USD to THB reflects a weakening US dollar in the short term, driven by expectations of aggressive interest rate cuts from the Federal Reserve in 2026. Recent data, including a surprising decline in US inflation from 3% to 2.7%, has led markets to anticipate a dovish shift from the Fed. As a result, analysts highlight that the USD is facing downward pressure, with significant implications for its value against the Thai baht.
Currently, the USD/THB is near 90-day lows at 31.11, which is 3.4% below the three-month average of 32.21. This depreciation is consistent with a broader trend, where mixed economic indicators from the US—weak manufacturing signals coupled with resilient labor data—are creating uncertainty. A bullish risk sentiment in the equity markets also pressures the USD lower, as investor preferences shift away from safe-haven assets.
Conversely, the Thai baht is showing strength due to several factors. It has appreciated by 2.2% against regional currencies in mid-December and is benefiting from a supportive current account surplus. The Bank of Thailand has adopted a cautious approach to manage the baht's rapid appreciation, recently tightening oversight of dollar transactions. Furthermore, a recent interest rate cut aims to stimulate growth amid economic sluggishness. Projections from the Fiscal Policy Office suggest the baht could average around 31.8 per US dollar in 2026, indicating a stronger Thai currency in the upcoming year.
Moreover, the relationship between oil prices and the THB is noteworthy. Oil prices have reached 14-day highs close to $62.51, hinting at potential volatility that could influence currency movements. Since Thailand is a significant oil importer, fluctuations in oil prices can markedly affect the THB's strength against the USD, as changes in oil costs impact overall economic performance and trade balances.
In summary, the outlook for USD to THB suggests a weaker US dollar ahead, alongside a potentially stronger baht, influenced by local economic policies and external market dynamics. Stakeholders should remain alert to upcoming economic indicators and geopolitical developments that could further sway this exchange rate.
