UOB Global Economics & Markets Research said Thailand’s external buffers remain credible, but current-account dynamics have deteriorated as imports rose. In April–May, the current account moved into deficit, driven by heavier purchases of energy, raw materials, intermediate goods and capital goods rather than a drop in exports. Headline CPI returned to positive territory, running at about 2.8–2.9% year on year in April–May, while producer price pressures stayed elevated.
The bank described Thailand’s external position as resilient because official reserves remain high and external-debt metrics are manageable, meaning the April–May deficits are not yet a balance-of-payments concern. However, strong exports are being matched by strong import demand, which trims the domestic value-added multiplier from the export upturn and helps explain why trade strength has not fed through fully into household income, SME revenue or broader manufacturing output. The baht is expected to be underpinned by structural buffers, with near-term FX moves still sensitive to oil prices, Fed expectations and current-account releases.
Current Account Weakness And Mounting External Pressures
Given the recent weakening of the current account, we see a less favorable environment for the Thai Baht in the immediate term. Thailand’s Ministry of Finance just reported a preliminary current account deficit for June 2026 of USD 2.1 billion, continuing the trend from April and May. This confirms that strong import demand is outpacing the benefits of resilient exports.
These deficits are happening while external pressures are mounting. Brent crude has been trading volatilely above $95 per barrel for the past month, directly increasing Thailand’s import bill. Meanwhile, recent US jobs data came in stronger than expected, leading markets to price in a higher probability of another Federal Reserve rate hike by September.
FX Market Implications And Strategy Considerations
For traders, this suggests the path of least resistance for USD/THB is higher in the coming weeks. The combination of domestic current account weakness and a strong US dollar backdrop creates significant headwinds for the baht. We are watching key resistance levels, with a potential test of the 37.50 mark if these trends continue.
We believe implied volatility on USD/THB options will likely rise as uncertainty over oil prices and Fed policy grows. This environment favors strategies that protect against further baht depreciation. Hedging foreign currency payables or purchasing short-dated USD calls against THB could be prudent moves.
This dynamic is reminiscent of the 2021-2022 period, when high energy prices and a hawkish Fed cycle also put significant pressure on the baht. In that period, the USD/THB pair saw a sustained upward trend, a pattern that could repeat. Therefore, we are cautious about holding unhedged short USD/THB positions.
Looking ahead, we will be closely watching the next official trade balance figures and global energy price movements. Any signs of a moderating import bill or a more dovish tone from the Fed would be the first indicators of a potential reversal. Until then, the risks for the baht remain tilted to the downside.
