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Friday, October 22, 2021

The Thai Baht Asia’s Best Currency Bet

The currency that was at the center of the 1997 Asian financial crisis is emerging as the region’s safest bet.

The Thai baht has remained little changed during this month’s trade dispute turbulence, while peers such as the Rupee and the Won have weakened almost 3%.

Strategists say the currency is not likely to lose its newfound status as a haven anytime soon, thanks to Thailand’s rising current-account surplus and record foreign reserves.

“’Thai baht remains a safe haven as we haven’t had significant impact from the worsening trade war like other emerging markets,” said the Bangkok-based chief strategist at Krung Thai Bank Pcl. He predicts the baht will rise to 30.25 per USD by the end of the year, from about 30.74 seen recently.

Global emerging markets have been hit by the 3X whammy of the Fed, President Trump and the Chinese RMB Yuan.

Monday, China let the offshore Yuan weaken past 7 to the USD on the threat of new US tariffs, worrying traders already unnerved by the Fed’s signal that it may pursue an extended easing cycle.

Unlike Taiwan and SKorea, which run current-account surpluses as well, Thailand is not in the direct line of fire in terms of the supply-chain impact of the global trade wars, said the currency strategist at Bank of Singapore Ltd.

The baht has become a refuge for investors in the region during times of risk aversion,” said the head of Asia research at Australia & New Zealand Banking Group Ltd. in Singapore. “Its recent outperformance is a testament to that.”

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