Less baht for your dollar

Tourists to Thailand this year will find themselves getting less value for their money, as the baht continues to strengthen against foreign currencies. Easing of restrictions on capital controls on March 1st are likely to accellerate this appreciate, with the baht expected to soon hit 30 to US1$. This is a 20% gain in 18 months.

The original capital controls were implemented in December 2006 to guard against speculators as the baht continued to strength. Unattractive economic factors in the US have caused investors to flood the Thai markets with money, causing a steadily improving baht to dollar exchange rate that was hurting the country’s export competitiveness.

The Thai baht has appreciated at a much stronger rate against the floundering dollar compared to other Asian currencies. The introduction of capital controls had created a dual rate with the offshore exchange rate set at 31 baht to a dollar while rates given here in Thailand were a more favourable 33.5. The two will now merge but the Bank of Thailand is expected to spend several billion baht in foreign reserves to manage the appreciation gradually.

The baht has also moved up to its strongest exchange rate against the British pound in more than five years, reaching 63 baht to £1. The net result is that monies exchanged are devalued by approximately 8% year-on-year and regular visitors will certainly notice the increased expense of their holidays.