Baht plunges as China Covid protests rock investor sentiment
The baht opened at 35.75 to the US dollar on Tuesday, plunging from Monday’s close of 35.54.
The currency will likely move between 35.65 and 35.90 against the greenback during the day, Krungthai market strategist Poon Panichpibool said.
Poon said the baht is fluctuating under pressure from China’s Covid-19 situation and protests. The protests added to concern over economic slowdown in China, Southeast Asia’s top trading partner.
Poon said short-term downward pressure on the Thai currency will persist while the currency market remains in a risk-off state.
Purchases of gold after the price dropped were also causing the baht to weaken, he said.
However, the currency is unlikely to test its resistance level at 36 to 36.10 per dollar since concern over foreign sell-offs of Thai assets had not materialised. Instead, foreign investors began buying more short-term bonds on Monday, Poon said.
He added that investors might not adjust their positions until the US Federal Reserve’s announcement on Wednesday, which is expected to signal a slower pace of policy rate hikes.
Poon advised investors to use hedging tools such as options to manage risks in a highly volatile currency market.