BOT Sees Limited Fed Impact on Baht, 50 Billion Baht Flows into Thai Assets

Thailand has recorded a net capital inflow of about 50 billion baht into domestic assets since the beginning of 2026, with the Bank of Thailand (BOT) saying there is currently limited risk of a sharp capital flight. Surach Tanboon, senior director of the Monetary Policy Department at the Bank of Thailand, said movements in the baht have largely followed changes in the US dollar, which in turn have been influenced by global economic developments, monetary policy in major economies and geopolitical factors. He said markets had already largely priced in expectations surrounding the interest-rate differential between Thailand and the United States, as reflected in the baht’s relatively stable movement in recent months. Since the beginning of the year, capital flows have continued moving into Thai assets, with a net inflow of about 50 billion baht. The inflows have been concentrated mainly in the stock market, along with the bond market. Surach said the latest Japanese interest-rate increase to 1.25% was not significantly different from Thailand’s rate. The Bank of Japan’s 7–2 decision was also not unanimous, leading markets to place less weight on further rate increases. The BOT assesses Thailand’s current policy rate as appropriate for domestic conditions. Monetary policy will remain dependent on the economic outlook and incoming data. The central bank said the Thai economy continues to recover below its potential and the recovery remains uneven. Inflation is expected to rise due to supply-side factors before declining in 2027. Against this backdrop, monetary policy can remain accommodative alongside a combination of measures aimed at addressing broader economic challenges. Thailand’s external financial position also remains strong, with net international reserves exceeding US$300 billion. The reserves are above international benchmark levels and cover short-term external debt by 2.8 times. Surach said Thailand had experienced some capital outflows following the conflict in the Middle East, but the amount remained relatively low compared with other countries in the region. The BOT therefore does not currently see a significant risk of severe capital outflows.