BANGKOK, Thailand – Anusorn Thammajai, Dean of the Faculty of Economics and Director of the Digital Economy, Investment, and International Trade Research Center (DEIIT) at the University of the Thai Chamber of Commerce, has warned that the rapid and strong appreciation of the Thai baht could negatively impact the overall Thai economy, particularly exports and tourism. He cautioned that export growth could turn negative in the fourth quarter of 2025, increasing the risk of deflation.
Anusorn emphasized the urgent need for government spending measures, to be implemented alongside monetary easing and interest rate cuts. Such measures would not only stimulate the economy but also help slow the baht’s appreciation. He noted that gold exports are not a primary factor driving the baht’s strength.
Regarding proposals to trade gold in baht with specific taxes while exempting dollar transactions, Anusorn said the approach is unlikely to slow the baht’s appreciation effectively. Increasing the baht supply in the system would be more efficient.
The baht’s strength is being driven by Thailand’s trade and current account surpluses, alongside short-term speculative capital inflows, further amplified by the weakening U.S. dollar. The dollar’s decline reflects a slowdown in U.S. economic data, coupled with expectations that the Federal Reserve may cut interest rates, prompting investors to shift from holding dollars and U.S. bonds to other currencies and assets like gold.
Anusorn forecasted that if the Federal Reserve reduces rates by 0.50% at its September 16–17 meeting, the baht could strengthen to test 30.50–31.00 per dollar. He stressed that the U.S. economy is only slowing, not heading toward a financial crisis similar to the subprime collapse.
However, trade barriers and immigration restrictions in the U.S. could have long-term effects on prices, labor shortages, and standards of living. Anusorn added that gradual reductions in U.S. interest rates over the next year, combined with high public debt (36.2 trillion dollars, 122% of GDP), will likely continue to weigh on the dollar over the long term.
He highlighted that under normal conditions, countries with flexible exchange rate systems allow currency values to adjust to balance foreign demand and supply, reducing the need for central bank intervention. Yet, in the short term, rapid baht appreciation could harm exporters, especially those without hedging tools, making government intervention necessary.
Anusorn concluded by urging the interim government to implement strategic, efficient public spending, avoid unnecessary debt, and focus on revenue-generating measures. With Thailand’s public debt currently around 67.9% of GDP and projected to rise to 68.9% within three years, he warned that credit rating downgrades could raise borrowing costs for both the public and private sectors.
