Baht’s rally stalls amid fallout from fresh virus outbreak

A tug-of-war is building for the baht as concern about the nation’s virus outbreak counters the support from the current-account surplus.

Tailwinds for the baht are fading after it breached the key level of 30 per dollar as a jump in domestic infections weighs on economic growth. Traders are now trying to determine if the currency’s recent pullback is a pause en route to it testing the year’s high of 29.542 or the start of a weaker trend.

The baht’s reversal of fortunes illustrates how a rally in emerging Asian currencies risks unravelling as a relentless rise in infections worldwide clouds the outlook. Still, if the baht’s gains fade, this will help boost Thailand’s exports and ease pressure on policy makers to intervene.

While the authorities have refrained from imposing a wider lockdown to stem an outbreak of infections in a coastal province, the…