Thailand's baht has surprised markets by becoming one of the world's best performing currencies over the past year despite the country's political turmoil, but that could soon change, analysts said.
"The strength of the baht has been puzzling coming as it has against a backdrop of political uncertainty, cyclical underperformance, looser monetary policy, the promise of easier fiscal policy and a strong dollar," Jonathan Sequeira, an analyst at Goldman Sachs, said in a note Tuesday.
Only the Somali shilling, Costa Rica's colon and Guatemala's quetzal have outperformed the baht against the dollar since June of last year, he said. The U.S. dollar was fetching around 32.43 baht in early Asian trade Friday, compared with around 32.90 baht around mid-2014.
With reserves' data suggesting the baht's strength isn't due to central bank intervention, Sequeira attributes the currency's run to lower commodity prices -- especially for gold and fuel -- spurring a decline in imports and a large trade surplus.