Thailand’s baht weakened to 32.55 against the US dollar despite portfolio inflows, as the kingdom posted a record April trade deficit of USD 10 billion, according to Commerzbank FX analysts. The historic deficit marks a significant deterioration in Thailand’s external balance and raises concerns about sustained currency pressure despite short-term capital inflows providing temporary support. The widening trade gap reflects structural challenges facing Thailand’s export-dependent economy amid global demand uncertainty and rising import costs.
The currency faces a tug-of-war between foreign portfolio flows that typically strengthen the baht and fundamental weakness from the deteriorating trade position. Traders should monitor whether portfolio inflows can continue offsetting trade imbalances or if the deficit will drive more sustained depreciation. The situation creates uncertainty for THB positioning as technical factors clash with worsening fundamentals.
FXnCO Insight
Expect increased volatility in USD/THB as portfolio flows may prove insufficient to counter persistent trade deficit pressure, creating tactical shorting opportunities on baht strength rallies.
Source: FXStreet