Thai baht soars to six-month high against US dollar

The Thai baht opened at 34.78 against the US dollar today, strengthening from yesterday’s close of 35 to a six-month high.

The baht’s sudden rise is down to the Bank of Thailand’s (BOT) hiking the policy rate by a quarter point earlier this week.

The BOT remains committed to a gradual monetary tightening policy, raising the policy rate from 1% to 1.25% on Wednesday.

Economic growth this year is expected to be at 3.2%, lower than the prior projection of 3.3%, according to the central bank. The BOT also cut its 2023 growth forecast to 3.7% from 3.8%.

Thailand’s currency is facing pressure from the depreciating US dollar, gold sales, and foreign investors possibly buying more Thai bonds amid continuous drops in the US 10-Year bond yields.

Investors might want to sell the baht now as it edges near the support level of 34.75. Once it hits the support level, it could depreciate again.

Although, US labour data coming out this weak could impact the baht’s value. Low employment rates could help the baht but high levels of employment could weaken the baht, so it’s up to investors whether to hold out and see.

Krungthai market specialist Poon Panichpibool advised investors to use hedging tools in the highly-volatile currency market.

Economists have high hopes for the baht in the long run. Capital Market Research Specialist at Kasikorn Bank Kittika Boonsrang predicts…

“I expect the Thai baht to get a high that could be around 33.50 to 34.00 per US dollar by the end of next year.”

The forecast will only be achievable if Thailand pumps up exports and ramps up tourist arrivals, added Kittika.

Other regional currencies have also strengthened against the greenback amid hopes that China will ease up their Covid-19 restrictions.

Currencies have been highly sensitive to the Federal Reserve’s aggressive monetary tightening this year which was designed to fix high inflation rates in the US.

Source - The Thaiger

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Thai baht plunges to 38 against US dollar for first time in 16 years

The volatile Thai baht has depreciated to 38 against the US dollar even faster than foreseen by economists. The last time the baht reached 38 to the dollar was 16 years and two months ago on July 26, 2006.

The baht has hit the 38 mark even earlier than expected by the Head of Capital at Kasikorn Bank Kobsidthi Silpachai, who just a few days ago predicted that the baht would depreciate to 36.50 – 38 against the US dollar within the next month.

The baht’s depreciation is attributed to the rising strength of the US dollar. The dollar index has risen to 114, causing several currencies worldwide to depreciate. The US dollar continues to grow in value due to continued federal fund hikes.

The dollar has flown in 2022 amid the Federal Reserves’ aggressive interest rate hikes, Europe’s energy crisis, and China’s Covid-19 lockdowns. Cambridge University economist Mohamed El-Erian said the strength of the US dollar is bad news for the world economy…

“What is clear is we have this relentless increase in yields, this relentless appreciation of the dollar. They are both bad news for corporates and for the economy.”

Amid pressure from high inflation rates and the depreciating baht, Thailand’s Monetary Policy Committee will meet today to discuss raising the policy rate from 0.75% to 1%. The policy rate hike will increase interest rates between Thailand and the US with the goal of temporarily strengthening the baht and “supporting economic recovery.”

In the long term, Thailand is relying on the recovery of the tourism industry to strengthen the nation’s currency. K Bank predicts that the baht will rise to 35 to the US dollar before long as continually growing tourist arrivals pump money into the economy.

The Tourism Authority of Thailand predicts that Thailand will welcome a total of 9.3 million tourist arrivals in 2022.

Source: Bangkok Biz News / The Thaiger

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