A sharp drop of the Thai Baht, has become Asia’s worst performing currency so far in just a month as fears over the Coronavirus outbreak threatens Thai economy.
Last December, reports disclosed that the central bank was struggling to keep the Baht moderate on the chart, whose strength was harming tourism, exports and international relations.
Now, the tables are turned and the Kingdom is scrambling for a Plan B to deal with lost tourism revenue, especially from China.
China’s ban on group tours to help contain the spreading virus that’s left 259 people dead as of today will inevitably take a toll on Thailand’s tourism industry.
China is Thailand’s biggest source not only of foreign tourists but also investors. 11 million Chinese visited Thailand last year, 28% of the total. The Tourism Authority of Thailand expects at least 2 million drop from Chinese visits this year.
Economists say virus cases are killing tourism. So far, Thai health authorities have detected 19 cases, the second highest in Southeast Asia aside from China.
“Importers are in a panic tantrum, rushing to buy dollars for fear that the Baht will weaken further.”
He added that the Baht might reach 32.5 per dollar during this quarter.
The baht traded at 31.11 to the greenbuck on Thursday, the weakest in seven months. It reached a 7-year peak of 29.91 last year.
China is also the Kingdom’s second largest export market. “In the short term, a weak Baht is good for exports, which should not contract,” according to the chairwoman of the Thai National Shippers’ Council.
The head of capital markets research of Kasikorn Bank told Reuters that the manufacturing sector will be affected next if the China shutdown extends beyond early February.