USD/THB Firms As Onshore Markets Return, But Sub Recent Highs, 2024 Tourist Arrivals Hit 10mln

Thailand markets return today, after being shut since last Thursday (11th of April). The early FX trend is a fairly muted one, with USD/THB higher, but below recent highs. The pair was last in the 36.65/70 region, with earlier April highs marked at 36.84. A break above these levels would likely see 37.00 targeted. On the downside, the 20-day EMA is back near 36.375.

• USD/THB moves still appear broadly consistent with US-TH government bond yield differentials. The 2yr spread is close to +270bps, near recent cyclical highs. US developments will continue to dictate to the spread. The most recent BoT meeting pushed back on government pressures to ease the policy rate, although some sell-side analysts see easing risks rising.
• Other focus points will be on commodity prices, particularly energy. Like elsewhere in the region the THB terms of trade proxy (per Citi) has been trend lower in recent weeks.
• A potential positive offset is recovering tourism inflows. Local media stating that 2024 YTD arrivals has topped 10mln, with the government aiming for 40mln in total this year (last achieved pre Covid in 2019, see this link)
• The fresh highs in gold prices may also be aiding sentiment at the margins.
• The local data calendar is fairly quiet, with car sales for March due (18-24th of April), while next week should see Mar customs trade figures print.