Thursday, August 06, 2020

Baht weakens marginally while BOT pumps liquidity with bond buyback

Mar 20. 2020
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The baht on Friday (March 20) opened at Bt32.56 to the US dollar, weakening from Thursday’s close of Bt32.50.

The Thai currency is expected to move at between Bt32.40 and Bt32.70 to the US dollar, SCB Securities senior market strategist Jitipol Puksamatanan said.

On March 19, the Bank of Thailand (BOT) stimulated liquidity in the bond market by buying back bonds valued at Bt45 billion, in order to reduce fluctuations in the financial market.

However, Thailand’s bond yields have gradually risen in both the short and long term. “Recently, the yields of two-year bonds reached 1.08 per cent, while the 10-year ones rose to 1.81 per cent, due to selling by financial institutions and investors who wanted to hold cash,” the SCB strategist said.

In addition, the baht has moved in a narrower range, and has been pressured by foreign investors selling off risk assets.

“The baht would strengthen when the dollar weakens or the market was in a ‘risk-on’ state,” he added. In a risk-on state, investors have a higher appetite for risk.

On Thursday night, the S&P 500 and Euro Stoxx 50 rose 0.5 and 2.8 per cent, respectively, while WTI crude oil price increased by 22 per cent to $25 per barrel.

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