Covid situation and US Fed move could decide bahts direction
The baht opened at 32.90 to the US dollar on Tuesday, strengthening from last week’s closing rate of 32.92.
The Thai currency is likely to move between 32.85 and 33.00 during the day and between 32.70 and 33.20 this week, Krungthai Bank market strategist Poon Panichpibool said.
Poon explained that there were two factors affecting the baht -- the dollar's direction and the Covid-19 situation all over the world, especially in Thailand.
The baht could weaken if the US Federal Reserve relaxed monetary policy.
Poon explained that the dollar would strengthen if the Fed signalled it was confident about the US economic recovery and decided to decrease quantitative easing.
The baht could fall to 33 to the US dollar if the Covid-19 situation worsened. However, Poon expected the Bank of Thailand to help decrease the baht's volatility and reduce risks for the business sector.
He recommended that investors use various hedging tools such as options.
