Baht opens stronger but may test resistance if dollar bounces back
The baht opened at 35.82 to the US dollar on Monday, strengthening from Friday’s close of 36.01.
The Thai currency is expected to move between 35.75 and 35.90 against the greenback during the day and between 35.70 and 36.30 during the week, Krungthai market strategist Poon Panichpibool predicted.
Poon said the baht is likely to weaken and test its resistance level from 36.20 to 36.30 if the dollar strengthens. He suggested investors beware of the baht’s volatility before the US inflation report has been revealed.
However, the baht’s weakening might be limited as exporters are waiting to offload their dollars. Moreover, foreign investors are waiting to buy Thai stocks on the dip and the sale of gold will also help slow down the baht’s weakening.
Poon speculated the dollar might strengthen if the US inflation is higher than expected and the US Federal Reserve sends a signal to increase the interest rate at a high rate. The dollar might also strengthen if the Chinese or European economic reports are worse than expected.
The strategist advises investors to use hedging tools like options to manage their risks in the highly volatile currency market.
