Bank of Thailand says strong baht erodes export competitiveness, urges close watch on NEER and REER
MacroDigital Finance
A report on Thailand's economic outlook, financial conditions, and monetary policy implementation by Warangkana Imudom of the Monetary Policy Department at the Bank of Thailand, presented to the 4/2026 meeting of the Economic and Academic Affairs Committee on 7 September 2026, states that the Thai economy is still expanding at a low and uneven pace, relying mainly on the technology and semiconductor cycle and the tourism sector. Against this backdrop, the strengthening baht and exchange rate volatility have become a drag on the country's competitiveness. The report notes that looking only at the baht-to-US-dollar exchange rate is insufficient; it is necessary to consider the NEER, which weights the baht against a basket of 25 currencies of trading partners and competitors, and the REER, which adjusts the NEER for inflation differentials to reflect true price competitiveness. In August 2026, the average NEER25 stood at 50, under an average exchange rate of 33.04 baht per US dollar. Meanwhile, the structure of technology and industrial exports relies on imported raw materials for as much as 70%, so although imported component costs benefit somewhat, the prices of finished export goods are at a disadvantage compared with Vietnam, Malaysia, Indonesia, and the Philippines, which manage exchange rate flexibility and REER levels better. The report raises the question of whether monetary and fiscal policymakers will seriously coordinate their tools to manage the exchange rate index in line with competitiveness, before the advantages of Thailand's export base are eroded beyond easy recovery.
