SATURDAY, March 02, 2024

Weakening of baht might slow down with market in risk-on state: strategist

Weakening of baht might slow down with market in risk-on state: strategist

The baht opened at 37.93 to the US dollar on Thursday, strengthening from Wednesday’s close of 38.30.

The currency is expected to move between 37.85 and 38.15 during the day, Krungthai Bank market strategist Poon Panichpibool predicted.

He said the baht’s weakening might slow down as the market is in a risk-on state and this could put pressure on the dollar, leading to a weakening of the US currency.

Poon suggested monitoring foreign transaction flows as investors might return to purchase Thai stocks and long-term bonds after bond yields increased significantly while those in other countries decreased.

Moreover, Poon said, if the gold price increases, it might slow the weakening of the baht. The currency’s resistance level is now 38.20 to the dollar.

However, the baht is still under pressure after the central bank’s Monetary Policy Committee (MPC) said it would increase the interest rate gradually. The market, however, expected the MPC to increase the rate quickly.

The market might be in a risk-on state for a short period, he said. It will be a bear market rally until the US 10-year bond yield turns over as the US Federal Reserve signals it may not increase the interest rate rapidly, believing the global economy is not all bad.

In Thailand, most importers are waiting for the baht’s value to head down before purchasing the dollar, Poon said, adding that the support level for the Thai currency is between 37.80 and 37.90.

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