Singapore – The Thai baht has been among the worst performers in Asia since the start of the Iran War and it’s at risk of further losses as the conflict drives up oil prices, analysts say.
The baht is likely to come under renewed pressure given the size of the nation’s energy imports, according to MUFG Bank. The seasonal pattern of Thailand’s current account will weigh on the currency in the second quarter, Malayan Banking says.
The Thai currency has already weakened more than 4 per cent against the US dollar since the war began on Feb 28, trailing only the Philippine peso in Asia. Against the Singapore dollar, the baht has fallen 3.4 per cent over the same period.
The baht retraced some of its declines in early April as a US-Iran ceasefire began, but it has started to drop again as talks between the two sides have stalled.
“We still see risks to the downside for Thai baht, given it runs the largest net oil-and-gas trade deficit in the Asia region,” said Lloyd Chan, a foreign-exchange strategist at MUFG Bank in Singapore. “We are mindful that the US blockade of Iranian ports still persists, which will continue to disrupt energy flows.”
The baht will probably weaken to 33.90 per US dollar this quarter, Mr Chan said, which would put the currency at the weakest level since April 2025.
The Thai currency is particularly vulnerable as the nation is the most exposed in Asia to higher energy costs, according to a study by Nomura Global Economics, based on factors such as the share of fossil fuels in total energy supply and the energy trade balance.
“Higher oil prices and a seasonally narrower current account keep us cautious on the baht in the second quarter,” said Alan Lau, a foreign-exchange strategist at Maybank in Singapore. The baht is set to end this quarter at 32.50 per US dollar, assuming oil prices don’t fall significantly, he said.
Thailand’s current-account data due on April 30 will give an initial reading about the impact of surging oil prices. The February numbers had shown an unexpected improvement in the surplus, but there seems little reason to be optimistic this time around.
Thaiand’s economic growth may slow to around 1.3 per cent in 2026 if the war drags on, versus a pre-conflict estimate of 1.9 per cent, Bank of Thailand (BOT) Governor Vitai Ratanakorn said in April. The central bank has also signalled it will refrain from raising interest rates “for as long as possible” to support the economy, even though inflation is set to accelerate
“The BOT has already downgraded growth and flagged a negative impact on the current account, which is bearish for the baht over the medium term,” said Jeffrey Zhang, an emerging markets strategist at Credit Agricole CIB in Hong Kong.
The baht is likely to weaken to 33 per US dollar by year-end, he said. BLOOMBERG
