Due to the virus causing severe damage to the tourism industry, Thailand’s currency has depreciated

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Thailand update

Thai baht is no longer one of them Asia’s strongest currency Become one of the worst performing countries this year before the pandemic because the coronavirus crisis has disrupted its key tourism industry.

Since the end of 2020, the Thai currency has fallen by more than 9% against the U.S. dollar, making it one of the world’s weakest performing currencies this year, keeping pace with currencies such as the Turkish Lira and the Peruvian Sol.

The loss of tourism funds on which the Thai economy used to rely, plus a new wave Coronavirus disease The infection shattered hopes for a rapid economic recovery, turning buyers who were bullish on their assets into bears.

Mark Baker, investment director of Aberdeen Standard Investments, said: “The Thai baht is the only one affected by the collapse of cross-border services, and the tourism industry is clearly the largest of them.” “This number has basically plummeted to zero, and there is a big The scale of the balance of payments shock.”

In 2019, the last year before the pandemic, Thailand received a record 40 million foreign tourists. Tourism is a reliable source of foreign exchange, keeping a large surplus in the current account, and foreign investors are very interested in the Thai baht. Since the beginning of the pandemic, the reversal of fate has been obvious.

Khoon Goh, head of Asian research at ANZ Bank in Singapore, said Thailand’s current account deficit was US$2.2 billion in the 12 months to the end of June, which is “significantly compared to the US$40 billion surplus that the country reported before the pandemic. reverse”.

“One of the main drivers of the strong baht before the pandemic was its huge current account surplus, which was mainly driven by the tourism industry,” Wu said. “It’s gone now: it’s gone completely, considering what’s happening, it won’t come back for a long time.”

Thai Prime Minister Prayut Chan Ocha Promise to reopen The country-which closed its borders to most travelers in March 2020-was open to international tourists by October.

Thailand’s largest island, Phuket, launched last month “Sandbox” The plan aims to begin accepting foreign tourists who have been vaccinated and to set an example for other resorts seeking to reopen.

However, so far, the number of people arriving in the sandbox has behind The forecast of the tourism sector is more conservative. Many Thais doubt that Prayut’s October reopening goal can be achieved.

The line chart of current account balance (rolling 12 months, 1 billion US dollars) shows that the decline in tourism has caused Thailand's balance of payments to

The daily reported Covid infections are mainly attributed to the more contagious variant of Delta, which reached a record of nearly 20,000 people, and implemented measures for work, travel and entertainment in Bangkok and other severely hit “Crimson” provinces Semi-blockade restrictions.

Market analysts said that foreign investment by Thai companies has also put pressure on the Thai baht and global trends, including the pressure on emerging markets because it is expected that the strong recovery of the US economy will prompt the Fed to start controlling its large-scale monetary stimulus measures.

Pipat Luengnaruemitchai, chief economist at Phatra Securities in Bangkok, said: “People expect that by the end of this year, the tourism industry may recover, but now it is clear that this will not happen.” “We think that we will not be able to make more sense until the second half of next year. Open to tourism.”

The reporter for this story is on Twitter @JohnReedwrites.



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