Baht strengthens against dollar on signs of foreign appetite for Thai stocks

The currency will likely move between 38.00 and 38.25 against the greenback during the day and between 37.80 and 38.50 during the week, Krungthai market strategist Poon Panichpibool predicted.

Poon said the baht will swing sideways with a key resistance level of 38.50 to the dollar.

Gold prices and foreign transactions in the Thai stock market would govern the baht’s volatility this week, he added.

The analyst said foreign investment started flowing back into Thai stocks following the Stock Exchange of Thailand (SET) index’s rebound last week.

He expects a shift in foreign investment towards Thailand if the index exceeds its resistance level of 1,600 points while the market is in a risk-on state.

However, he warned to watch out for foreign investors selling long-term Thai bonds amid a continuous increase in global bond yields.

For the dollar, he advised monitoring investors’ reactions to big-tech companies’ performance reports, as disappointment would push the currency market back towards a risk-off state and pressure the dollar to strengthen.

This week’s meetings of the European Central Bank and Bank of Japan may also cause fluctuation in the currency market. Poon said the euro and yen may weaken if the banks fail to signal tighter monetary policy.

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