Baht nosedives against dollar on Tuesday

The currency is expected to move in a range between 34.35 and 34.50 on Tuesday, said Krungthai Bank market strategist Poon Panichpibool.

Poon said the baht could weaken during the day as the dollar strengthens over concern that the US Federal Reserve will increase the interest rate to bludgeon inflation.

He also noted that investors have unloaded the baht, selling 1.3 billion baht of short-term bonds in recent days.

This sell-off could see the baht test its resistance level of 34.40-34.50 to the dollar, he added.

However, the baht would not drop much past its resistance level as exporters are waiting to sell the dollar, Poon said.

Meanwhile assets in Asian emerging markets (EM) including Thailand are being supported by the Chinese economy’s rebound after the government eased lockdown measures. This factor would limit baht weakening, Poon said.

He added that the Thai currency would only test the 35 per dollar mark if Beijing restored lockdown measures, slowing the Chinese economy and triggering sell-offs in EM Asia markets.

Poon forecast the baht would move between 34.20 and 34.50 to the dollar until new factors emerge.

He advised businesses to use hedging tools such as options to manage risks in the highly volatile currency market.