If seasonal patterns are anything to go by, Thailand’s baht is set to reverse course after riding this year’s emerging-market rally.
There’s “negative seasonality ahead” for the baht, HSBC Holdings Plc strategists led by Paul Mackel in Hong Kong wrote in a research note dated Monday.
The currency tends to do well in the first quarter as tourist numbers peak and then usually loses momentum in April before weakening in May as Thai companies pay out dividends to overseas investors, they wrote.
The seasonality is borne out in the baht’s performance over the last decade. The currency has risen against the dollar in the first quarter in eight of the 10 years through 2016, while falling in every May except 2007 and 2009.
Of the world’s 30 biggest economies, Thailand was most dependent on tourism in 2015, World Travel & Tourism Council figures show.
The sector accounted for 17.7 percentof Thai gross domestic product last year, around two-thirds of which came from foreign travelers, according to government data.
The tourist flows often produce a swelling of the current-account surplus in November through March when foreigners descend on the country’s beaches, temples and nightclubs.
The excess normally narrows in April and May as dividends are disbursed to offshore shareholders, said Anchali Singh, an analyst at Kasikornbank Pcl in Bangkok. Some 90.5 billion baht ($2.6 billion) will be paid out to non-residents over the two months in 2017, she estimates.
The baht’s decline may be partially offset this year by positive Asian economic data and as the global view on broad dollar strength moderates.
HSBC cited those reasons as it raised its second quarter forecast for the baht from 36.6 a dollar to 35.8, a level that still implies a decline of about 3 percent from the current spot rate.