Baht, stocks up on Fed's decision
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The Thai currency and shares went up Friday, buoyed by the US Federal Reserve Board's decision to maintain rates for now.
As concerns for capital outflow from emerging markets eased, the baht at 6.07pm rose by 0.5 per cent to Bt35.57 per US dollar, from yesterday's closing of Bt35.75.
The Stock Exchange of Thailand index also edged up by 0.62 points or 0.04 per cent to 1,390.32 points, on thin turnover of Bt39 billion. Foreign investors were net-sellers of Thai shares today, boosting the month-to-date net sell to Bt5 billion and the year-to-date net sell to Bt91 billion.
The dollar also weakened against other emerging market currencies while emerging stock markets also ended higher today.
The US central bank's head Janet Yellen said the ongoing crisis in China and recent turmoil on world markets had played a role in keeping borrowing costs at zero.
The Fed's decision followed widespread warnings about the dire impact a rate increase could have, with the World Bank predicting this week it would cause a "perfect storm" in financial markets.
United Overseas Bank said in a note that a hike is expected when the Federal Open Market Committee (FOMC) convenes during December 15-16. The Fed funds rate is expected to reach 0.5 per cent by end-2015 and 1.5 per cent by end-2016.
"We ruled out the liftoff taking place in October because we expect the potential a repeat of the US government shutdown and US debt ceiling limit drama in October/November could complicate Fed monetary policy decision making just like what happened to Bernanke in 2013," the bank said.
After the US rate hike, TMB Analytics expected the gradual weakening in the Thai baht. US rate hikes during mid-2004 and mid-2006 pushed dollar up by 4 per cent against Thai baht.
