Baht volatility expected to be temporary, analysts say
The baht reached a two-month high of 34.04 to the US dollar last week before falling to 34.40 against the greenback at the close of trade on Friday, making the baht the most volatile currency in the region last week.
Traders said the volatility was due to the domestic political situation as the baht began falling after the second round of voting for a new Thai prime minister failed to select one.
Other currencies in Asia fell against the US dollar as it gained strength from a decline in the number of weekly jobless claims, reflecting a robust labour market in the United States.
The baht has strengthened by 0.5% against the greenback since the beginning of the year. The average estimate of financial analysts in Thailand is that the baht will remain strong this year, reaching 33.80 to the greenback by the end of the year.
Kasikornbank Research Centre expects the baht to fluctuate between 33.80 and 34.70 to the dollar in the week ahead. Key factors to watch include meetings of the US Federal Reserve, the European Central Bank, and the Bank of Japan, as well as the political situation in Thailand and international capital flows, it said.
