According to analysts, the Thai baht’s fate hinges on the return of Chinese tourists

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The Thai baht has been on a tear as of late, but economists believe that this rising trend may soon come to a halt if there is not a significant increase in the number of Chinese visitors to the Kingdom of Thailand. The value of the baht increased by over 6% versus the US dollar during the course of the past month in response to news that the US Federal Reserve (Fed) would reduce the rate at which it is increasing interest rates.

Despite the rise in inflation, a revitalized tourism sector has contributed to the expansion of Thailand’s gross domestic product in the third quarter, which increased by 4.5% when compared to the same period in the previous year. The Thai baht has been overbought as a result of the bullish trends, although it was oversold just two months ago, which is an indication that its value would not be stable for too much longer. The appreciation of the baht can be attributed to indications that the Federal Reserve will slow down its rate hikes; yet, some US bankers aren’t convinced that the United States’ battle against inflation is done just yet.

As investors anticipate with bated breath the publication of the minutes from the most recent meeting of the Federal Reserve, there is a good chance that the value of the dollar may shift today. Those areas rely on tourism However, its value is likely to remain unpredictable unless a new catalyst comes into play, such as the return of Chinese tourists. The Thai baht was the second-best performing currency in Asia. Prior to the epidemic, tourism accounted for over 20% of Thailand’s economy, with Chinese travelers making up approximately 28% of all international visitors. However, as a result of Beijing’s ongoing Covid-zero policy, the country’s most popular tourist destinations are virtually entirely barren of Chinese visitors at the moment.

China gave indications that certain limits on covid-19 would be eased. However, China has subsequently dashed international hopes of a speedy reopening by stating that it may take more than a year to put an end to the pandemic. Nobody knows when China will start relaxing its control over its borders, but as soon as they do, economists anticipate that the value of the Thai baht will skyrocket. The Bank of Thailand has stated that it will continue to take a cautious approach to the process of tightening monetary policy.