MUFG kept its year-end forecast for USD/THB at 34.00, arguing that Thailand’s technology-driven export upswing is being outweighed by weaker external fundamentals. The bank said the electronics surge is delivering limited FX support because Thailand imports semiconductors used in production; higher chip prices and a rising imported-content share have lifted the electronics import bill, compressing net trade gains. It also pointed to a wider commodity shock, with Thailand’s terms of trade falling to a 27-year low as prices for energy, metals and intermediate goods rise.
Export Dynamics and the Electronics Sector
The bank said the electronics surge is delivering limited FX support because Thailand imports semiconductors used in production; higher chip prices and a rising imported-content share have lifted the electronics import bill, compressing net trade gains. It also pointed to a wider commodity shock, with Thailand’s terms of trade falling to a 27-year low as prices for energy, metals and intermediate goods rise.
Macroeconomic Headwinds and Monetary Policy
The macro backdrop was framed as supportive of USD/THB strength. US growth was described as resilient, while Thailand’s GDP growth slowed to 1.9% year on year in Q2, with net exports a major drag. Monetary policy divergence remains a factor: the Bank of Thailand policy rate is 1.0% and is projected to hold into early 2027, even as the Federal Reserve has raised rates and may tighten further. MUFG also cited baht valuation concerns, persistent net foreign portfolio outflows and limited fiscal capacity to buffer the oil shock.
