Brown Brothers Harriman expects the Bank of Thailand to leave its policy rate at 1.00% for a third straight meeting, a stance that implies negative real yields and keeps the Thai baht lagging other Asian currencies. In South Korea, the Bank of Korea is pencilled in for a second consecutive 25 bps increase to 3.00%, although a Bloomberg poll shows 5 of 17 analysts looking for no change. The central bank has reiterated that further rate rises may be required, while domestic conditions remain firm.
Real GDP growth is tracking above the Bank of Korea’s 2.6% forecast for 2026, and inflation is still above its 2% target. In the Philippines, the Bangko Sentral ng Pilipinas is forecast to deliver a third consecutive 25 bps hike to 5.00%, with 4 of 22 analysts in a Bloomberg poll expecting a hold. The move would come after USD/PHP rose to a record high near 62.00 last week, with the peso pressured in part by firmer crude oil prices.
Derivative Trade Recommendations for the Thai Baht, South Korean Won, and Philippine Peso
We advise derivative traders to short the Thai Baht (THB) in the coming weeks by purchasing USD/THB call options or entering short forward contracts. The Bank of Thailand is expected to keep its policy rate at a low 1.00%, which leaves real yields deeply negative. With Thailand’s consumer inflation hovering around 1.5%, this yield disadvantage means the THB will continue to lag behind its regional peers.
In contrast, we recommend taking long positions on the South Korean Won (KRW) through futures or call options. The Bank of Korea is poised to raise its benchmark rate to 3.00% as domestic inflation remains stubbornly above its 2.0% target. This tightening is backed by strong economic fundamentals, with South Korea’s 2026 GDP growth on track to outpace earlier forecasts of 2.6%.
For the Philippine Peso (PHP), we suggest buying USD/PHP put options to trade the central bank’s aggressive defense of the currency. The Bangko Sentral ng Pilipinas is expected to push its policy rate to 5.00% after the currency hit a historic low near 62.00 against the US dollar. This decisive rate hike should temporarily stabilize the peso, even as global Brent crude prices trade near $80 a barrel and pressure the energy-importing nation.
