The baht is expected to fall by the unexpected devaluation of the yuan. CIMB Thai Bank's research centre warns the baht could slide to 40 to the dollar next year in the event of a currency war.
A currency war should not be ruled out, as the People's Bank of China is likely to further weaken the yuan for both the short and long term to combat a deepening slowdown in the world's second-largest economy.
If that happens, it would pose a threat to South Korea's won, the Singapore dollar, Taiwan dollar and the baht, as they have high exposure to China.
Despite the baht's pullback against the dollar, it will not help much in improving exports because the currencies of its rivals have also weakened, with some even falling at a faster pace.
Thailand must reform its economy and strengthen long-term competitiveness because of the middle-income trap, liquidity trap, delays in private investment and an ageing society.
The baht is expected to fall by the unexpected devaluation of the yuan. CIMB Thai Bank's research centre warns the baht could slide to 40 to the dollar next year in the event of a currency war.A currency war should not be ruled out, as the People's Bank of China is likely to further weaken the yuan for both the short and long term to combat a deepening slowdown in the world's second-largest economy. If that happens, it would pose a threat to South Korea's won, the Singapore dollar, Taiwan dollar and the baht, as they have high exposure to China.Despite the baht's pullback against the dollar, it will not help much in improving exports because the currencies of its rivals have also weakened, with some even falling at a faster pace. Thailand must reform its economy and strengthen long-term competitiveness because of the middle-income trap, liquidity trap, delays in private investment and an ageing society.
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