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Euro to Thai Baht (EUR/THB) Exchange Rate Forecast to Strengthen as Thailand?s Growth Slows on Yuan Outlook

Published: 17 Aug at 5 PM Tags: Euro Exchange Rate, Australian Dollar Exchange Rate, New Zealand Dollar Exchange Rate, Currency Exchange, Euro Crisis, UK, Exchange Rates, Economy, Inflation,

The Euro to Thai Baht (EUR/THB) exchange rate advanced by around 0.4% on Monday afternoon.

With gradually easing concerns regarding Greece’s inability to repay the European Central Bank (ECB) a significant amount on August 20th, the single currency strengthened versus many of its currency rivals. Although many Euro-area nations have yet to approve the terms for the latest financial aid package, most analysts agree that the Hellenic nation will receive aid prior to that looming deadline. Even if the Hellenic nation fails to repay the ECB on time, the Frankfurt-based central bank is likely to be relatively lenient given that it looks very likely that they will receive the money at some point.

In addition to improved sentiment, the Euro continues to see demand in response to resilience against fears surrounding China’s economic slowdown. After the ECB were hawkish with regards to inflation, and with recent ecostats pointing towards growth in the currency bloc, the common currency is one of the few shrugging off outside influence from the world’s second-largest economy. Additional gains on Monday can be related to Eurozone Trade Balance in June which saw the surplus widen as a result of a weakened currency and soft imports.

The Euro to Thai Baht (EUR/THB) exchange rate is currently trending in the region of 39.3448.

Conversely, the Thai Baht slumped versus its major peers during Monday’s European session. Much of the downtrend can be linked to the People’s Bank of China’s (PBoC) decision to devalue the Chinese Yuan. Although the fallout from this was felt by all global currencies, Asian emerging-market assets were hit hardest. ‘The Yuan devaluation is not good news for Thailand, as it will put more pressure on our exports,’ said Pimonwan Mahujchariyawong, a Bangkok-based economist. ‘Government spending and tourism are the only two engines that can drive growth. But the outlook is dimmer now with the Yuan move.’

In addition, Monday saw the Baht dive after Gross Domestic product produced unremarkable results. The second-quarter Thai growth rate came in at 2.8% on the year; slightly lower than the 3.0% growth registered previously. On a quarterly basis, Thai GDP came in at 0.4% for the second-quarter which was fractionally below the median market forecast figure. ‘With the growth outlook fragile, rising downside risk to growth could elicit further monetary easing,’ said Weiwen Ng, a Singapore-based economist at Australia & New Zealand Banking Group Ltd. ‘Still, monetary easing alone via the interest-rate channel seems insufficient to deal with this, and we look for the BOT to lean on allowing baht weakness.’

The Euro to Thai Baht (EUR/THB) exchange rate was trending within the range of 39.1325 to 39.4382 during Monday’s European session.