Thai Baht and Taiwan Dollar Tussle for Supremacy in Asia

(Bloomberg) -- Emerging Asia’s top-performing currency in 2019 may find itself dethroned this year by a rival that’s also armed with a strong current-account surplus.

Both the Thai baht, which took the regional crown with a 9% gain last year versus the U.S. dollar, and the Taiwanese dollar climbed above the psychologically significant 30-per-dollar level this week. Scotiabank, among the top forecasters for Thailand’s currency last year, recommends investors place long bets on the Taiwan dollar and use the baht to fund the purchase.

“The Taiwan dollar is expected to rally further amid continued capital inflows,” said Qi Gao, a Singapore-based strategist with the Canadian bank, which was consistently ranked by Bloomberg as among the top three forecasters for the baht last year. “Thailand’s regulators are concerned about the currency’s strength. They said yesterday they’re considering new currency measures.”

The trade strategy, which Scotiabank first recommended on Dec. 17, has room to run through the first quarter at least, Gao said. He expects more funds flowing into Taiwan from investments by local firms returning from mainland China despite the prospect of a phase-one trade deal between the U.S. and China. The baht will likely slow its advance from last year, he said.

And if momentum is any indication, the Taiwan dollar may be poised to move into the lead. It has already gained about 1.9% against the baht in the last three months.

©2020 Bloomberg L.P.