Although economists at Credit Suisse remain bullish on tourism recovery in Thailand, USD/THB is expected to trade with an upward trajectory in a 34.20-35.50 range as the yuan weakens.
Bearish despite optimism on global tourism
“Thailand’s tourism outlook is poised to improve for the remainder of 2022, albeit from a very low base. In our view, there is plenty of upside for further tourism growth, since March 2022 arrivals from the US and Europe were just 12- 14% of their pre-COVID (March 2019) level.
“Despite our optimism on Thai tourism, we think yuan weakness and higher US yields will lead USD/THB to rise within a range of 34.20-35.50.”
“The 35.00 level is a key barrier that could take some time to break, and the Bank of Thailand (BoT) could intervene to defend this key level in the next few weeks. However, as US yields continue to rise and the dollar strengthens against CNY and JPY, we expect BoT to relent and allow the baht to weaken past 35.00.”