Thai baht, travel stocks rise as nation eases tourism restrictions

(Bloomberg) – The Thai baht has recovered the most since August, as an easing of travel requirements for vaccinated visitors brightened the outlook for the tourism-dependent economy.

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The baht jumped 1.4% to 33.426, the biggest gain since August 24. Visitors from 10 low-risk countries will not be required to undergo isolation upon arrival from November 1, Prime Minister Prayuth Chan-Ocha said on Monday. Thai stocks were set to close at their highest level since September 6.

Analysts are stepping up bullish bets on the baht after it fell to the bottom of the Asian currency rankings with a loss of nearly 11% this year.

“We expect the reopening to positively surprise market expectations through the end of the year, leading to a rally in the baht,” said Divya Devesh, head of currency research for ASEAN and the South Asia at Standard Chartered Plc in Singapore. The bank’s year-end target for the currency is 32.50 per dollar.

Thailand continues its strategy of “living with Covid-19” after foreign tourist arrivals plunged to 73,932 in the first eight months of this year, from nearly 40 million visitors who generated more than 60 billion income dollars in 2019.

The benchmark SET index climbed 0.7% to 1,644.93 at 10:15 am in Bangkok. Asia Aviation Pcl, which controls the country’s largest low-cost airline, jumped 9.8%. Airports of Thailand Pcl, the state-controlled airport operator, rose 3.9%. Bumrungrad Hospital Pcl, which drew most of the income from foreign patients before the Covid-19 outbreak, has jumped 5%.

With the country’s opening up to tourists and an increase in vaccination rates, the economy will begin to rebound in the last three months of the year, Bank of Thailand deputy governor Titanun Mallikamas said at the end of the year. last month. At least 70% of the country’s population will receive two doses of the vaccine by the end of December, according to the government.

“Reopening Thailand to international travel is critical for the economy and limits the negative impact of the recent shift from a surplus to a deficit position in the current account,” said Irene Cheung, Singapore Senior Strategist at Australia & New Zealand Banking Group. Ltd.

Bullish forecasts

The baht is expected to rise to 32.6 per dollar by the end of the year, according to a Bloomberg poll, a gain of more than 2% from current levels. In comparison, the Philippine peso and Malaysian ringgit are expected to rise 1% and 0.5% respectively, while the rupee is expected to decline 0.6% from current levels.

However, this is unlikely to be a direct route for the baht.

“The initial recovery in tourism income may be slow,” said Yanxi Tan, foreign exchange strategist at Malayan Banking Bhd. A boost to the currency might not materialize more clearly until after a few quarters, but the baht could end the year at 33 percent. dollar, he added.

(Updates with Thai stock movements in the second and last paragraphs)

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