(Bloomberg) -- The Thai baht is closing in on its longest run of daily gains against the dollar in six months, thanks to buoyant gold prices and a recent advance in China’s yuan.
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Thailand’s currency has climbed for seven successive days, with the rally partly sparked by relief that Washington refrained from imposing additional tariffs on Chinese goods for now. The baht strengthened about 2.5% during the period to outperform all its Asian peers.
“No tariff hikes on President Trump’s Day 1 in office, a strengthening Chinese yuan, and rising gold prices have likely contributed to recent Thai baht strength,” said Lloyd Chan, a currency strategist at MUFG Bank Ltd.
The baht’s outlook is influenced by the yuan’s moves as the 90-day correlation between the currencies stands at around 0.56. A reading of 1 signals that the two are in sync. A jump in gold prices to near record levels has also helped, given Thailand’s position as a major trading hub for the precious metal.
But the baht’s winning streak is likely to grind to a halt if Washington makes good on a pledge to impose additional levies on all Chinese goods. President Donald Trump said his threat to hit China with 10% tariffs on all imports was still on the table, a day after he left the world’s no. 2 economy out of the countries he was looking to target imminently.
“The recent Thai baht strength will likely be just a temporary reprieve” as additional US tariffs are probably delayed, not canceled, said MUFG’s Chan.
The baht advanced as much as 0.7% to 33.884 per dollar on Wednesday.
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