Baht Forecasted to Gain Against Pound
The Thai baht is forecasted to rise against the British pound in recent forecasts. The baht is expected to rebound following the announcement that the country’s GDP expanded more-than-expected for the second-quarter of the year, rising 0.8% year-over-year, up from forecasts of just 0.5% growth.
Emerging market gains further helped the Thailand economy this week following tensions from last week’s bombings.
The baht is forecasted to maintain upward pressure against the pound as the country’s economy continues to recover. The year-over-year estimates for yearly economic growth, according to the University of Thailand Chamber of Commerce, is 3.3%.
The upward revision is good news for foreign investors who have flocked to the baht as an investment vehicle.
Consumer confidence rose for the first time in July in over seven months, and positive inflation and an uptick in the manufacturing production index are all signs that the country is on track for future growth.
Referendums in August voted to keep the current Junta in place in a shocking majority vote. The vote puts an end to the uncertainty in the country, which are all positive indicators that the baht can regain ground against the pound.
Inflation, a worrisome metric for many economists, rose by 0.1% in the second quarter of the year, marking the fourth month in a row that the country’s inflation rate remained in positive territory. Prior to this streak, the baht fell for eight months straight, suffering major losses along the way.
“Inflation levels were a major concern for Thailand’s economy. Slowing inflation causes consumers to wait until prices of goods are lower, and wages drop at the same time,” states an analyst for Daily Forex Report.
The GBP/THB forecast points to the UK’s referendum causing the sterling pairing to move downward in a continual spiral since Britain voted to leave the EU. Paired with a rise in Thailand’s economy, it’s expected that the baht will continue to gain on the pound. Support for the pound is expected near 44.986, but support is expected to break near the 44.750 mark, where the GBP/THB is expected to fall below 44.00.
Monday pointed to an uptick in the baht, as the currency appreciated 0.6% on the day. The country rallied on the GDP, expanding 3.5% on the quarter ended June. Accelerated government spending led to the country’s revived growth with mega projects are underway.
Thailand’s government has worked to stimulate the economy through rail and highway projects that are part of an infrastructure overhaul. The projects will help to offset sluggish exports in the country.
Infrastructure improvement will further make it easier to conduct trade in the country. Residents will be less reliant on the country’s hectic taxi system, too, which will cause an uptick in workers commuting further to work.
Thailand’s economy enjoys a low unemployment rate that is one of the lowest in the world. The economic downturn didn’t put enough pressure on the country’s economy to push it past the 1% unemployment rate. Thailand’s jobless claims has been below 1% for the majority of the time since 2011. Agriculture accounts for 40% of employment in Thailand.
Author: Jacob Maslow