Baht will test resistance level as dollar strengthens
The baht opened at 35.50 to the US dollar on Friday, unchanged from Thursday’s closing, and will move in the range of 35.40 and 35.60 on Friday, a strategist predicted soon after markets opened.
Krungthai Bank market strategist Poon Panichpibool said the currency is likely to weaken and test its resistance level at 35.75 to the dollar during the day, as it has already hit its previous resistance level of 35.50.
Meanwhile, the dollar is strengthening as it is getting continuous support, while foreign investors are selling risky assets, causing the baht to weaken this week.
He suggested monitoring the baht’s volatility in relation to the euro during the day, as the market will be receiving European economic information.
If it is worse than expected, it might pressure the market into selling the euro, causing it to weaken and support the dollar to strengthen in the short term.
Poon also believes gold transactions will help the baht strengthen if the metal’s price rebounds back to its resistance level from $1,840 to $1,850 per ounce. Poon advises investors to use hedging tools such as options to manage risks in the highly volatile currency market.