From Asia’s best to worst

The Thai baht’s (THB) 3.7% depreciation against the US dollar in January represents a reversal of fortune for a currency which had been one of the top performers in the emerging markets in recent years. The 8.6% appreciation in 2019 was the highest among Asian currencies and the second-largest in the emerging market universe (after the Russian rouble). The performance so far this year puts it at the bottom of the pack.

The USD/THB rate appears to have moved to a new higher trading range of 31-33, up from the 30-31 range held in the second half of 2019. We see the pair trading close to the top end of the new range within the next three months. We should see some retracement once the threat from the coronavirus diminishes, something that may not happen until later this year. We have revised our end-2020 view for the pair to 32.50 from 30.5 earlier.