Poon forecast the baht would fluctuate and likely test the resistance level of 34.50 as the dollar strengthens before the US Federal Reserve’s meeting and gold buying transactions.

He advised monitoring foreign investments in the Thai stock market, adding that inflows could slow the baht’s weakening. However, foreign investors would likely wait for the results of the Fed meeting on Wednesday before making moves.

Poon advised Thailand-based businesses to use hedging tools such as options to manage risks in the highly volatile currency market.

The Fed is expected to signal an interest rate rise to 0.75 per cent on Wednesday. However, anything lower would likely trigger the dollar to weaken, Poon said.

Moreover, if the terminal rate marking the end of the Fed’s current hiking cycle moves to 3.75 per cent, US 10-year bond yields are likely to drop and put more pressure on the dollar to weaken.

However, the dollar is still supported by the Ukraine-Russia conflict and the Covid-19 situation in China, which are driving European and Asian currencies to weaken.