Baht weakens on Monday, signalling rally may be over
The baht opened at 35.85 to the US dollar on Monday, weakening from Friday’s close of 35.73.
The currency will likely move between 35.65 and 36.85 against the greenback during the day and between 35.45 and 36.10 during the week, Krungthai market strategist Poon Panichpibool said.
Bloomberg reported on Monday that the baht’s 6% rally against the dollar over the past month could be coming to an end in the absence of new catalysts, such as the return of Chinese tourists.
Poon cautioned that the baht might weaken if the market is concerned that the US Federal Reserve will hike the interest rate again.
He also advised monitoring the gold price, saying a drop in the price could lure investors to buy gold, which would pressure the baht to weaken.
The baht would also face downward pressure if foreign funds flow out of the Thai stock market in large quantities. However, Poon said the Thai economy was in continuous recovery and the baht’s resistance level of around 36 to the dollar would slow any weakening of the Thai currency.
Poon also advised that the dollar might strengthen further from concern that the Fed will increase the interest rate. He advised keeping an eye on the result of the Fed’s December meeting. However, the dollar is unlikely to strengthen much if European economic data are better than expected, bolstering the euro.
He also advised investors to use hedging tools such as options to manage risks in a highly volatile currency market.