Poon said the Thai currency might fluctuate and weaken early during the day as the dollar strengthens because the markets are in a risk-off state amid concerns that the US Federal Reserve would increase the interest rate.

Meanwhile, the European Central Bank (ECB) is scheduled to hold a key meeting at 6.45pm (Thailand time), which would cause the baht to seesaw before and after the meeting, he pointed out.

If the ECB signals that it would increase the interest rate and stop injecting liquidity via quantitative easing, the euro might advance and cause the dollar to weaken, in turn strengthening the baht, he said.

However, Poon said the US currency might not weaken even if the ECB signals it will increase the interest rate, because the movement of the dollar will depend on US Consumer Price Index results due on Friday. If US inflation is seen to slow, it might reduce concern that the Fed would increase the interest rate by a big margin and would cause the dollar to weaken.

According to Poon, the baht’s key resistance level is 34.70-34.80 to the dollar as exporters speculate that the Thai currency might weaken in the short term and are waiting to offload the dollar at that level.

Moreover, foreigners might invest in short term bonds again if the baht does not weaken past the resistance level.

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