In a wave of enthusiasm not sensed since pre-Brexit days, the British pound is now worth just over 45 baht, an improvement of 4.34 percent since the beginning of the year. The UK currency is also at a 15 month high against the US dollar, having successfully tested the 1.31 US$ bar. By most criteria, the pound is the star-performing international champion of the year so far against a basket of currencies.
What’s propping up the pound are the UK’s elevated interest rates, created by stubborn inflation rates – the headline figure is 8.7 percent – which in turn are fuelled by the increased prices of imported goods. Meanwhile, inflation has been falling in the United States so that interest rates there are no longer attractive to hot-money inflows looking to make a quick profit. Expectations that the Fed will continue the hiking of American interest rates have faded.
Meanwhile, the Thai baht is suffering from the failure of the 8-party coalition, led by the Move Forward Party, to take political power in Thailand with ongoing threat of prolonged civil strife. Additionally, Thai exports have been dropping in the past few months as part of a slowdown in the economy as a whole. At present, the Thai economy is rudderless as the military-backed government of general Prayut-chan-o-cha has been in caretaker mode since the general election of May 14.
