Thailand’s large energy trade deficit and weak domestic yields heighten the baht’s vulnerability to rising oil prices and geopolitical risks.
The Thai baht is at risk of further declines due to Thailand’s significant net oil and gas trade deficit, which exposes the currency to energy price shocks. The country’s external position remains fragile amid prolonged Middle East conflict and elevated oil prices.
Thailand’s terms of trade have weakened, while domestic yields remain low, reducing the baht’s real carry appeal. Headline inflation rebounded to near 3% in May after a period of deflation in 2025, further eroding the currency’s attractiveness.
Analysts warn that escalating Middle East tensions could amplify downside pressure on the baht, particularly against the U.S. dollar.