Standard Chartered Bank (Thai) expects the baht to remain weak for the rest of the year, despite its recent appreciation this week driven by external factors.

The baht strengthened to around 33 per US dollar this week, primarily due to global developments.

According to Tim Leelahaphan, the bank's senior economist, the appreciation was largely driven by a joint yen-buying intervention by the US and Japanese central banks, which began late last week and has continued this week. The intervention put downward pressure on the US dollar.

The coordinated intervention also contributed to a decline in US Treasury yields, while a rebound in global gold prices from around US$4,000 per ounce to about $4,300 currently provided additional support for the baht.

On Monday, the yen held on to its gains after Japan and the US carried out the rare joint intervention, lifting the currency from its recent 40-year lows.

"Given these global factors, the baht has appreciated by around 50 satang against the US dollar over the past few days. However, we expect the baht to remain on the weaker side against the dollar for the rest of the year due to domestic challenges," Mr Tim said.

Standard Chartered forecasts the baht will end 2026 at around 32.50 per dollar. The bank upgraded its 2026 Thai GDP growth forecast to 1.6% from 1.4% after a strong first-quarter gain of 2.8%.

For the second quarter of 2026, Thailand's economic growth is expected to slow to less than 2% due to the impact of war in the Middle East. However, a rebound is projected for the third quarter, supported by the government's stimulus measures.

He advised traders to monitor the economy's underlying momentum in the coming quarters.

Although a weaker baht could provide a short-term boost to exports and tourism by improving Thailand's price competitiveness, Mr Tim said it cannot substitute for stronger economic fundamentals.

Thailand's priority should be a coordinated policy response that rebuilds confidence, supports household purchasing power, and sustains the economic recovery, he noted.

Standard Chartered predicts the Thai economy will face greater challenges in the second half of 2026, as the foreign tourist arrival recovery remains uneven, domestic demand is subdued, and external uncertainties continue to weigh on business and consumer confidence.

Foreign tourist arrivals have missed projections, particularly from China, while hotel operators remain cautious about the outlook for the third quarter. Many hoteliers reported weak bookings and responded by lowering room rates to stimulate demand.

Foreign tourist arrivals are down 3% thus far year-on-year, while the average hotel occupancy rate is 69%.