World Bank says investors see Thailand as safe and stable

 

With Thai exporters and businesspeople lamenting the strength of the country’s currency, the World Bank cited the baht’s robust value as evidence of investor confidence in the Kingdom, and that the Bank of Thailand can do little about the currency’s appreciation.

“The trends that drive Thai baht appreciation aren’t easy to combat by central bank policies,” said Birgit Hansl, World Bank’s Country Manager for Thailand. “Investors are seeing Thailand as a stable and safe place. In that regard, the Thai baht is a good sign.”

The baht has increased in value against the dollar by about 7 percent since the beginning of 2019. That rise exceeds those of other currencies in Asia and the Pacific. Thai business executives have blamed the booming baht for a drop in exports that has lowered economic growth forecasts for the year. Tourism sector executives blame the baht for a fall in tourism arrival numbers, as the spending power of visitors with foreign currencies has declined.

The baht is not, however, the only factor in those trends. Global trade tensions and predictions of a possible recession in some countries have also contributed to fewer purchase orders and fewer visitors. The World Bank released a report last week that said, “growth in developing East Asian and Pacific economies is expected to slow as trade tensions, and global uncertainties intensify.”

On the other hand, the baht has emerged as a haven for some investors and allowed cash-rich Thai companies to invest overseas. Economists say the baht is rising mainly because of Thailand’s current-account surplus and its $220 billion of foreign reserves.

The resilience of the baht is a “double-edged sword,” but a high level of economic stability is more important for long-term investors, Hansl said.

photo courtesy of https://www.worldbank.org/en/country/thailand/publication/thailand-systematic-country-diagnostic-getting-back-on-track-and-reviving-growth