Tuesday, May 26, 2020

Baht strengthens against dollar

Mar 09. 2020
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By THE NATION

The baht opened today (March 9) at 31.40 to the US dollar, strengthening from Friday’s close of Bt31.42.

“The baht on Monday is likely to move at between 31.30 and 31.50 per US dollar, and this week between 31.07 to 31.76,” SCB Securities senior market strategist Jitipol Puksamatanan said.

Last week, the S&P500 and Euro Stoxx 50 indexes dropped 1.71 per cent and 3.91 per cent, respectively, while some US states have declared a state of emergency amid the Covid-19 situation.

Moreover, the oil price decreased sharply after the Opec+ grouping was unable to reach any agreement on reducing output. “Meanwhile, news that Saudi Arabia would produce oil under full production pressured the price to drop by 20 per cent today,” he said.

Brent crude has recently sold at $36.15 (Bt1,134.55) per barrel, decreasing by 45 per cent from the beginning of this year.

These fluctuations pressured US Ten-Year Treasury to drop by 0.54 per cent this morning, while the Japanese and German yields decreased 0.71 per cent and 0.14 per cent, respectively. “This caused the dollar to rapidly weaken,” Jitipol said.

The yen decreased to 104.13 per US dollar, while the euro rose to $1.137 per euro. The gold price has already increased to $1,700 per ounce.

Furthermore, the baht would weaken in line with the oil price, Jitipol said. 

“In the short term, the currency would swing to weaken among the ‘risk off’ market situation. In the long term, it would strengthen from a reduction in imports,” he concluded.

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