Bank of America has updated its projection for the Thai baht, now expecting the currency to weaken to 33 per U.S. dollar by mid-2026 before recovering to 31 per dollar by the end of the year. This represents a marked change from its earlier outlook that anticipated the baht remaining near 30 per dollar.
The bank cites an oil price shock occurring at the same time as an elevated Thai nominal effective exchange rate. The stronger nominal effective exchange rate followed post-election equity inflows into Thailand, and together these developments have raised the level of policy resistance around 31 per dollar.
Thailand's external position has come under pressure in the second quarter, with the current account buffer narrowing. Bank of America attributes this to weak tourism seasonality and income repatriation flows. In their view, oil prices settling above $80 per barrel in the second quarter may be sufficient to push Thailand's current account into a short-lived deficit, leaving the baht on softer footing in the near term.
Looking beyond the middle of 2026, the bank expects a rebound. They project the baht will appreciate to 31 per dollar by the end of 2026 as Thailand's basic balance surplus improves in the second half of the year. The basic balance, as noted by the bank, is a composite measure that combines the current account and net foreign direct investment flows.
Bank of America's revised view centers on the direct effects of elevated oil prices and the seasonal weakness in tourism on Thailand's external accounts. The forecast implies a temporary period of currency weakness before a recovery in the latter half of 2026 driven by a stronger basic balance.
Contextual note: The forecast change reflects the bank's assessment of near-term external pressures and anticipated mid-year improvements in capital and current account dynamics. Details on the exact timing and scale of the balance recovery are limited to the bank's projection that the basic balance surplus will strengthen in the second half of 2026.