Thai Baht Nears Four-Year Peak

The Thai baht edged higher to around 31 per dollar in late February, despite a surprise move by the Bank of Thailand to cut its interest rate. At its February 2026 meeting, the central bank reduced the policy rate by 25 bps to 1%, defying market expectations of a hold. It was the sixth reduction since October 2024, bringing the cumulative cut to 150 bps as authorities aim to support an economy weighed down by US tariff uncertainty, high household debt and a persistently strong baht. US President Donald Trump recently announced plans to set global tariffs at 15% after a Supreme Court ruling that invalidated his tariff policy, lower than the 19% rate applied to Thailand. Meanwhile, political developments have provided some investor relief. Prime Minister Anutin Charnvirakul’s Bhumjaithai Party is expected to lead a new coalition government by April, following solid results in a general election earlier this month. This outcome eased investor concerns about political instability.

The Thai baht traded around 31 per dollar in mid-February, hovering near its highest level since March 2021, as market sentiment was bolstered by the Bhumjaithai Party’s election victory. Investors see Anutin’s decisive win as potentially ending Thailand’s prolonged period of fragile coalition governments, which had weighed on economic growth and caused local markets to lag regional peers. The party has pledged to streamline regulations to attract foreign investment, maintain targeted consumer subsidies, and uphold fiscal discipline by narrowing the budget deficit. The result also lifted prospects for political stability, after the country experienced three prime ministers in as many years. In the three days following the election, the baht outperformed other regional currencies, supported in part by gold’s rise this year, a key factor in Thailand, where strong household holdings give the metal significant influence on local assets.

The Thai baht rose 1.3% to 31.2 per dollar on Monday, rebounding from losses last week and hitting a more than one-week high, as market sentiment improved following the Bhumjaithai Party’s decisive election victory. Thailand’s ruling conservative party, the Bhumjaithai Party, secured its first victory of the century and is set to win 191 of the 500 seats in the House of Representatives, nearly triple its 2023 tally. The outcome has boosted market confidence, as a strong showing for Prime Minister Anutin Charnvirakul and likely coalition partners reduces the risk of political deadlock or instability. In addition, the latest results pave the way for policy continuity, including the continuation of the party’s social handouts and the approval of a new budget. Meanwhile, the pro-democracy People’s Party, which had led in pre-election surveys, is on track to capture 115 seats.