Thai Baht weakens ahead of FOMC meeting outcome
The Thai Baht weakened over the past week in line with other Asian currencies and the Chinese Yuan and is projected to fluctuate within the range of 34.30-34.90 baht per dollar next week.
The markets closely monitor the outcome of the United States Federal Open Market Committee (FOMC) meeting, which is scheduled for June 13-14, according to Kasikorn Research Centre. The US dollar meanwhile strengthened on the back of the upwards adjustment of US Treasury bond yields.
The signalling of a more aggressive monetary policy than expected from the central banks of Australia and Canada prompted the market to cautiously reassess the trend of US interest rates. However, with the US dollar facing selling pressure after lower-than-expected jobless claims, the Fed may maintain interest rates at the current level of 5.00-5.25% at the upcoming meeting, although analysts say there is a possibility of another rate hike at the July meeting.
The Thai Baht rebounded slightly towards the end of the week, closing at 34.60 Baht per US$, compared to 34.54 Baht per U$ on June 2nd.
The investment portfolio status of foreign investors between June 6 and 9 saw a net inflow of 844 million Baht in Thai stocks but net outflows of 2.70 billion Baht from the Thai bond market, despite a net purchase of government bonds worth 64 million Baht.
Important factors to monitor during the coming week include the outcomes of the Federal Reserve's monetary policy ‘dot plots’ and economic projections (June 13-14), the European Central Bank meeting (June 15), the Bank of Japan meeting (June 15-16), the Thai political situation, and international capital flows.
Upcoming significant economic indicators for the US include the consumer price index, producer price index, retail sales, and industrial production data for May. The market also awaits the Fed's survey of manufacturing activity in the New York and Philadelphia regions, consumer confidence index, and inflation expectations data from the consumer perspective in June. Additionally, the market will track China's economic indicators for May, such as retail sales, industrial production, and fixed asset investment.
The FOMC holds eight regularly scheduled meetings per year. At these meetings, the Committee reviews economic and financial conditions, determines the appropriate stance of monetary policy, and assesses the risks to its long-run goals of price stability and sustainable economic growth.
