Baht weakens but performance of Asian economies in Q2 to determine trajectory

On Tuesday night, US investors sold stocks at the end of the quarter, pushing the S&P 500 down by 1.6 per cent, or 20 per cent in the first quarter.
“Also, CB Consumer Confidence -- the US consumer confidence index -- fell to 120 points, and would fall more,” the strategist added.
Meanwhile, Tankan Business Survey, the Japanese consumer confidence index, reported on Wednesday morning that the industrial sector had a positive view of business, saying it could return to operating businesses as before.
Besides, the VIX index fell to 53 per cent. “Although it was an abnormally high level, but it showed that the market has become accustomed to the risk of this day;” he explained.
The dollar has strengthened by around 15 to 20 per cent, compared to the high volatility of emerging market currencies.
Besides, only the gold, franc and yen have been positive in 2020’s first quarter.
Last week, the baht was pressured by three issues: concerns about economic contraction caused by the Covid-19 crisis, emerging market currencies weakening, and fluctuation in Asian stock markets.
The strategist said that the three issues would pressure the baht continually, since numerous countries have delayed economic activities as a measure to tackle the crisis caused by Covid-19 spreading.
“The baht would weaken to the point of Bt33.70 per US dollar,” he added. “However, the baht would strengthen if Asian economies could operate at usual capacity before western countries, by resolving the virus crisis in the second quarter”.