Thai Baht

The Thai baht is the official currency of Thailand and one of the more actively traded currencies in Southeast Asia. It has circulated as Thailand's money for over a century, and today it is divided into 100 satang.

The baht sits at the center of one of the most studied events in modern finance. Its forced float in 1997 set off the Asian financial crisis, a lesson in what can happen when a currency peg becomes impossible to defend.

The Bank of Thailand issues the baht and manages its value. Thailand runs a managed float, meaning the currency trades in the market but the central bank intervenes to smooth sharp moves and limit volatility.

That approach is shaped by hard experience. Before 1997 Thailand pegged the baht near 25 to the US dollar; defending that peg drained reserves, and when the country let the baht float in July 1997 it fell sharply, helping trigger a regional crisis.

Thailand is a major tourism and manufacturing hub, so the baht reflects the health of travel, exports, and regional trade. Tourism alone brings large inflows of foreign currency that get converted into baht, which can push the currency around.

For the wider region, the baht is also a reminder of how quickly confidence can turn. Its 1997 fall is a standard case study in emerging-market currency risk, and investors still watch Thai reserves and the trade balance as warning signs.

Thai inflation has generally been moderate and at times low compared with many emerging markets, which has helped the baht hold its value better than some regional peers. The central bank targets low, stable inflation to support that.

For Thai savers and for the many visitors who spend there, the baht's purchasing power depends on both domestic inflation and the exchange rate. A currency that holds value at home still buys less abroad if it weakens against the dollar.

The baht is usually quoted as the number of baht per US dollar. Since the 1997 float it has generally traded in a rough range between the low 30s and high 30s baht per dollar, far weaker than the old peg near 25 but much steadier than during the crisis.

The Bank of Thailand's management keeps the baht from swinging as wildly as a fully free-floating emerging-market currency might. The baht is on one side of well under 1 percent of global foreign exchange trades and is not separately reported in central bank reserves.