Baht rebounds on expectations that China will ease Covid controls
The baht opened at 35.40 to the US dollar on Wednesday, strengthening slightly from Tuesday’s close of 35.42.
The currency will likely move between 35.30 and 35.60 against the greenback during the day, Krungthai market strategist Poon Panichpibool said.
Poon said that the baht surged past its first support level at 35.50 during Tuesday trading on investors’ confidence that China would ease Covid-19 controls sooner than expected, offsetting downward pressure from the strengthening dollar and falling gold price.
He said the baht may strengthen further and test the support level at 35.20-35.30 if the Chinese government eases prevention measures as expected.
However, he warned volatility would pressure the baht if China maintains its current Covid policy.
The baht could also fluctuate and weaken if US Federal Reserve chairman Jerome Powell, in his address today (Wednesday, US), signals more interest rate hikes and a rate ceiling of 5.00%-5.25% to control inflation, Poon said.
However, the baht is unlikely to weaken much past its resistance level of 35.90-36 because foreign investors are still buying Thai stocks and bonds, he added.
Poon advised investors to use hedging tools such as options to manage risks in a highly volatile currency market.
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