Baht may continue to strengthen with market in risk-on state: strategist
The baht opened at 35.57 to the US dollar on Wednesday, weakening from Tuesday’s close of 35.55
The currency will likely move between 35.45 and 35.70 against the greenback during the day, Krungthai market strategist Poon Panichpibool predicted.
He said the baht might keep strengthening as the market is presently in a risk-on state, but geopolitical risk factors are becoming more severe and might pressure the currency market while supporting the dollar to strengthen due to the demand for safe-haven assets in the short term.
Poon suggested a close watch on foreign transactions as investors were selling Thai bonds and stocks for profit. If the transactions are net sales, it might pressure the baht to weaken.
He also mentioned that mass gold sales would naturally follow as the price of the precious metal increases. This would support a strengthening of the baht, he said, believing the Thai currency will not weaken much if the dollar advances when the market is in a risk-off state.
If gold transactions support the baht, he expected the currency’s resistance level to be 35.85-36 to the dollar.
Meanwhile, he feels its support level would be 35.50, a level most importers are waiting for to purchase the dollar and other foreign currencies.
Poon advised investors to use hedging tools such as options to manage risks in a highly volatile currency market.