Baht expected to fluctuate, weaken as dollar advances

The currency is expected to move between 36.55 and 36.80 during the day, Krungthai Bank market strategist Poon Panichpibool predicted.

He said the baht might fluctuate and weaken as the dollar advances due to the US inflation rate.

Moreover, the market is in a risk-off state and might pressure investors to sell their Thai shares for profit, so Poon suggested speculating on the number of stocks foreign investors offload.

However, he felt these investors will not sell a lot of Thai shares because most of them are old economy stocks, which are “less sensitive” to the interest rate and bond yield than tech stocks.

Furthermore, if bond investors believe the Bank of Thailand will gradually increase the interest rate, there may be a limited rise in the long-term yield as investors might wait for the moment to buy when the bond yield is seen heading in an upward direction.

This would not necessarily see heavy fund flows out of Thailand even as the market is concerned that the US Federal Reserve might increase the interest rate again, Poon noted.

He advised monitoring of gold purchases when the price goes down as it might pressure the baht to weaken in the short term. If the price goes up, it might slow the baht’s weakening.

Poon said the baht could weaken to its resistance level between 36.75 and 36.80 to the dollar – the level exporters are waiting for to sell the dollar, while the support level will be 36.20 to 36.30.

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