© Reuters. Thai Baht is Asia’s best outperformer in the tourism rebound bet
(Bloomberg) – After slipping for other Asian currencies for most of the year, Thailand’s Baht has staged a strong rebound to outperform its peers.
Baht has risen almost 1.5% in May after falling above 7% in the first four months of 2020. The catalyst? Traders are betting Thailand’s tourism-dependent economy will recover soon after the virus-induced decline as economies begin to reopen.
“The faster availability of a vaccine will mean a faster recovery in industries such as retail and tourism, and as such, currencies that are more dependent on these sectors may respond more,” said Frances Cheung, Singapore-based chief of Asia’s macro strategy at Westpac Banking (NYSE 🙂 Corp.
Yanxi Tan, a currency strategist at Malayan Banking Bhd. expects baht to rise to 31.7 per cent. dollars at the end of the year as the pandemic spreads. The currency rose as much as 0.5% to 31,872 per share. Dollar Tuesday, with emotions bolstered by signs of progress in developing a vaccine against the virus.
Still, the rebound of the baht may be curtailed after the government warned that the economy could gather as much as 6% this year due to the outbreak. The central bank is expected to lower its key policy rate by 25 basis points to 0.50% in a review Wednesday, according to a Bloomberg study.
Analysts say a relaxation of curbs will boost confidence. Thailand has allowed malls to resume business as part of a gradual return of its lockout, although it remains in an emergency situation through May.
“Thailand has done well to contain the coronavirus outbreak, with the country gradually reopening businesses and easing restrictions,” said Chang Wei Liang, a macro strategist at DBS Bank Ltd. in Singapore. “This has given investors confidence that tourism can recover over time, which in turn supports Baht.”
© 2020 Bloomberg L.P.
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