The USD to THB exchange rate has recently been under significant pressure, with the USD trading at 90-day lows near 31.44, representing a decline of 2.5% from its three-month average of 32.26. This weakness is primarily linked to dovish sentiments surrounding the Federal Reserve’s interest rate cuts, which are now anticipated to be implemented sooner and more aggressively, potentially starting as early as mid-2026.
Recent economic data from the United States reflects slowing growth, with mixed indicators leaving the dollar vulnerable. Jobless claims have spiked to a three-month high, suggesting a cooling labor market. Despite the persistence of low unemployment rates, the overall slowing economic activity bolsters expectations of further Fed rate cuts, which could continue to weaken the USD.
In the global context, the strengthening of other major currencies, alongside stabilizing risk sentiment, has compounded the downward pressure on the USD. As equity markets recover, the demand for safe-haven assets like the dollar diminishes, reinforcing bearish forecasts for the currency. Analysts suggest that unless unexpected strong inflation data emerges or there are significant signs of a change in Fed policy language, the USD may remain range-bound or continue to weaken.
Conversely, the Thai baht's recent strength has drawn attention, particularly as the Bank of Thailand adopts measures to manage its appreciation against the USD. Steps include increased monitoring of foreign exchange activities and discussions of potential interest rate cuts in response to ongoing negative inflation and economic growth challenges. With inflation remaining negative for the eighth consecutive month, the central bank is expected to cut rates by 25 basis points, which could further impact the THB's strength.
Thailand’s export growth is projected at 2% for 2025, but the strong baht and external challenges linked to U.S. tariffs may impede export competitiveness. Thus, the outlook for the THB remains linked closely to both domestic economic conditions and the broader global economic context.
Adding to this dynamic, crude oil prices have recently dipped to 30-day lows near 61.20, which can have secondary effects on the THB given the country's dependency on energy prices. The volatility in oil prices and their influence on economic sentiment could exacerbate movements in the USD/THB exchange rate.
Overall, the combination of a weakening USD amidst dovish Fed signals and the Thai baht's resilience due to central bank interventions is likely to maintain the current trend. The USD to THB exchange rate is expected to remain under pressure unless there are drastic changes in the economic fundamentals or geopolitical landscape.
