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Baht might weaken by risk-off market pressure: market strategist


The baht opened at 33.39 to the US dollar on Wednesday, weakening from Tuesday’s closing rate of 33.37.

The Thai currency is likely to move between 33.35 and 33.50 during the day, Krungthai Bank market strategist Poon Panichpibool predicted.

Poon said the baht might weaken by the risk-off pressure from the currency market in the short term. A strengthening dollar and a weakening yuan brought on by China’s Evergrande crisis might have a wide impact on the market, he said.

Meanwhile, other factors that could influence the Thai market are still vague, especially the Covid-19 situation, Poon said.

Moreover, the quantity of available bonds seems to be more than expected, because the government has raised the public debt ceiling and borrowed more. Investors, especially foreigners, might shun such long-term bonds.

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Poon pointed out that the baht might fluctuate according to the dollar if the US Federal Reserve signalled a monetary policy that’s tighter than the market expected.

He said some Fed officials could support an interest rate increase in 2022, or most officials could even back a gradual increase four times in 2024. This could cause the dollar to strengthen. The US currency might weaken if the Fed does not provide a clear signal or if any interest rate increase takes place according to market expectation.

Markets are in a risk-off state as wary investors speculate how Evergrande’s default would finally be tackled. If the Chinese government steps in, the problem will not heavily affect the monetary system or the economy, Poon said.

Investors are also awaiting results of a key Fed meeting on Thursday, he added.

Published : September 22, 2021