Macro Trade Idea - SHORT Thai Baht vs USD
Short THB/USD
We entered on 20th Feb, a SHORT THB trade. The pair is now BREAKING its 3-year trend line.
Our thesis:
Tourism is 20% of Thai GDP, 30% from China. Now is peak tourism season
Manufacturing: Big AUTOMOTIVE sector, LARGEST hub in ASEAN and HEAVILY reliant on other countries = 60% of value added for cars is from abroad
Services & industry account for 90% of GDP
Exports: 60% of exports located in Asia, China largest market (12%)
FDI to decrease. Japan disruptions - which invests 3x more than the US in Thailand - will be felt
Risk-off environment triggering safe-haven beach & USD appreciation
Tailwinds:
Bangkok could shut down
Flights to Thailand could be restricted
More easing from CBT (cut rates 3x in the past 1.5 year)
Headwind:
CBT to defend the THB with reserves (5x the levels from 1999)
Disclaimer: NOT investment advice!
Etienne de Marsac is the Associé Head of Absolute Return Strategies at Sunny AM