Baht weakens slightly as crucial US Fed meeting looms
The baht opened at 34.84 to the US dollar on Tuesday, weakening slightly from Friday’s close of 34.79 after the Constitution Day holiday on Monday.
The currency will likely move between 34.75 and 34.95 against the greenback during the day and between 34.50 and 35.20 during the week, Krungthai market strategist Poon Panichpibool said.
Poon cautioned that the baht could fluctuate and weaken amid a possible sell-off of risky assets. Last week saw foreign investors make net sales of 5 billion baht in the Thai stock market.
Poon said the baht would also face downward pressure if the gold price falls and triggers purchases.
For the dollar, he advised investors to look out for US inflation concerns and the US Federal Reserve’s decision on the interest rate at its two-day meeting starting today (Tuesday, US time). Dollar strengthening is forecast if the Fed signals an interest rate ceiling higher than market expectations of 5.25%.
Poon added that the dollar’s strengthening might slow if the European Central Bank and Bank of England continue to raise their rates.
He also advised investors to use hedging tools such as options to manage risks in a highly volatile currency mark.
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