Baht may weaken if market remains in risk-off state: strategist

The currency will likely move between 38.00 and 38.30 against the greenback during the day, Krungthai market strategist Poon Panichpibool predicted.

He said the baht is likely to weaken if the market remains in a risk-off state, a factor causing investors to possess the dollar.

Furthermore, he feels the baht could weaken to test its resistance level of 38.30 if core inflation from the US Core Consumer Price Index on Thursday is higher than market expectations (over +6.5 per cent y/y and +0.5 per cent m/m).

Poon suggested speculating on the gold price. The baht will not weaken much if the gold price is stable over the support level of 1,670 dollars per ounce, he added.

However, the baht could weaken to test its resistance point of 38.50-38.75 to the dollar if the Thai currency exceeds 38.30, which is the level investors, who are shorting the baht, will gradually sell for to make a profit, Poon said.

Moreover, foreign investors are offloading their Thai assets, which is another factor that is pressuring the baht, he pointed out.

Thai stock sales might slow down but not for bonds, at least not until long-term bonds swing sideways or go down, which could occur if the market is not worried that the US Federal Reserve might increase the interest rate or an economic recession is coming, Poon said.

The market strategist advised investors to use hedging tools such as options to manage risks in a highly volatile currency market.