Risk-off market, dropping gold may weaken baht today
The baht opened at 35.33 to the US dollar on Friday, strengthening from Thursday’s closing of 35.37, and is expected to move between 35.25 and 35.40 during the day.
Krungthai Bank market strategist Poon Panichpibool reckons the baht will strengthen as the dollar weakens, but said the baht will possibly fluctuate and weaken if foreign investments flow out and the market remains in a risk-off state.
The baht may also weaken if the gold price drops to its main support level of US$1,800 per ounce, encouraging some investors to buy at the dip.
He also warned investors to beware of the baht’s volatility before and after eurozone inflation figures have been revealed at 4pm Thailand time.
If inflation in Europe is high, the market will expect the European Central Bank to increase the interest rate, which will strengthen the euro and baht, and weaken the dollar.
Poon advises investors to use hedging tools like options to manage their risks in the highly volatile currency market.
