The strong Thai baht is proving to be the biggest obstacle in trying to lure tourists, according to The Tourism Council of Thailand who have had to lower its projection of over 40 million foreign visitors this year down to 39.7 million.
The president of the council says the surging baht is the main reason for the decline.
“It’s frightening to see the baht so close to 30 to a dollar. It’s the key reason for arrivals and receipts growth being lower than expected.”
The country’s significant current account surplus is being blamed for the strengthening of the currency and Somchai Amornthum from Krungthai Asset Management (KTAM) says that although the surplus is less than it was last year, it could still strengthen the baht, albeit at a slower rate.
“The baht could break past the 30 per dollar band at some stage next year, but the degree of currency appreciation is not expected to be too strong.” KTAM predicts that the baht will be at 31 to the dollar by the end of the year and 30 by the end of next year.
It has outperformed every other Asian currency this year with its strength hurting exporters and the tourism industry. The Bank of Thailand is limited in what measures it can introduce, with the policy interest rate already low, and Somchai says any further policy easing would have limited effect.