JP Morgan is "Long" Thai Bhat

Above: Thailand's tourism rebound is set to boost the country's current account balance. Image © Adobe Stock.

The Thai Bhat is tipped to be an outperformer in the Asia FX space according to currency strategists at JP Morgan eyeing the country's rapidly improving current account balance.

In a new research and strategy note the bank says the Thai currency's recent retreat against the U.S. Dollar is coming to a close, while gains against Asian peers such as the Rupee, Yuan and Peso are likely.

Expectations for THB outperform rest with JP Morgan's expectations for Thai economic outperformance over the coming months.

"We are assuming that monthly tourism arrivals improve to 28-30 million this year, from around 11 million in 2022," says analyst Anezka Christovova at JP Morgan.

Economists at the bank anticipate Thailand’s current account surplus should swell into yearend, thanks to a trifecta of improved tourism receipts, lower energy imports, and reduced freight costs.

The Pound-Bhat exchange rate remains near longer-term lows but rose half a percent in February and is back at 41.91.

Above: GBP/THB at four-hour intervals, showing the recent bout of strength.

The rise in spot takes the rate on typical bank payments to 40.53-40.82. Competitive holiday and cash rates are in the region of 40.86. For remittances, rates of 41.931 GBP/THB are now possible, according to Ria's send money app.

But if JP Morgan's assessment of the THB outlook comes to fruition GBP/THB would likely remain anchored in the 36-45 region over the coming weeks.

Economists at the Wall Street bank say a return to a large surplus portends a similar return to pre-Covid price action whereby THB was on a secular appreciation trajectory.

The payment of dividends to foreigners by Thai stocks can prove a seasonal headwind in April that could produce near-term headwinds.

"However in the context of a tourism recovery whereby the monthly tourism balance is already over $2bn per month and increasing, we do not see dividend season to be sufficient reason to stay away from being long THB," says Christovova.