Thai Baht, Gold and Middle East Tensions: May 2025

Originally published 2025-05-21. Translation and editorial review: 14 October 2026. Market figures refer to the original reporting period.

Financial Markets Group Siam Commercial Bank (SCB Financial Markets) reported that the baht moved in a range of 33.00–33.70 baht per US dollar, with a tendency to strengthen compared to the previous period. This is a result of the depreciation of the US Dollar Index (Dollar Index) together with the price of gold in the world market that continues to rise.

This situation occurred after news reports that Israel plans to attack nuclear facilities in Iran, sending global financial markets into “Risk-Off” or risk reduction mode. By selling off risky assets and holding more safe assets.

Important factors that cause the baht to strengthen

1. Dollar Index Depreciates

   • Investors sell dollars and turn to holding gold and yen.

   • Uncertainty regarding interest rate policy of the US Federal Reserve (Fed) after fluctuating economic numbers.

2. Gold prices soar.

   • Gold prices rose to near $2,450/ounce. It is considered a new high in the year.

   • Investors flock to buy gold as a hedge (Safe Haven), resulting in the baht strengthening in line with gold.

3. Fund Flow flows back to emerging markets.

   • Geopolitical concerns This has caused some investors to shift money back into the short-term Thai bond market.

Impact on the Thai economy and business sector

• Exporters are affected in the short term. If the baht continues to strengthen It may cause income when converted back to baht to decrease.

• Importers benefit from lower costs. Especially raw materials and capital goods from abroad.

• Foreign tourists if the baht is too strong. May reduce incentives to travel to Thailand

• The Thai capital market is still under pressure from uncertain fund flows. Therefore, it must be followed up continuously.

Short-medium term baht trend

Analysts expect that If the situation in the Middle East drags on And the price of gold continues to increase. There is a chance that the baht will return to strengthen and test the level. 32.80–33.00 baht per dollar in the short term.

However, volatility will remain high. Investors should keep an eye on the Fed's monetary policy and the US inflation report that will affect the Dollar Index and the direction of currency values around the world.

Summary

Movement of the baht during this period Reflects sensitivity to international situations Especially in a situation where the world market is highly uncertain. The role of the baht as a “proxy” for gold and safe havens is therefore increasingly important in the eyes of foreign investors.

#The baht strengthens #World Economy #ProjectCWF