Baht opens stronger against dollar on Friday but all eyes on US data
The baht opened at 34.70 to the US dollar on Friday, strengthening slightly from Thursday’s close of 34.79.
The currency will likely move between 34.60 and 34.80 against the greenback during the day, Krungthai market strategist Poon Panichpibool said.
Poon said that the baht is likely to swing sideways, bounded by a range of 34.50 to 35.20 to the dollar.
A risk-on market may pressure the dollar to weaken or swing sideways, supporting strengthening of the baht.
However, any baht strengthening would be hampered as investors had not yet adjusted their holdings of risky assets, bonds and currency to take account of new US economic data.
Poon warned of possible baht volatility when the market reacts to the latest US producer price index, due today, and US inflation data.
If these numbers do not reflect market expectations of an economic slowdown, the dollar may strengthen and breach its resistance level of 105 points on US Dollar Index (DXY). This would trigger market concern that the US Federal Reserve could hike the interest rate, Poon said.
However, he doubted the baht would weaken much, projecting its key resistance level at 35.20, supported by foreign investors who are still buying Thai short-term and long-term bonds and concern about a slow economy.
He forecast exporters would wait until the baht dropped close to its resistance level before selling dollars.
He also advised investors to use hedging tools such as options to manage risks in a highly volatile currency market.
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