They also expect the Thai policy rate to hold steady at 1.5 per cent for the rest of this year.

Jitipol Puksamatanan, a market strategist at Krungthai Bank (KTB), said that this year the US Federal Reserve may raise its benchmark interest rate at least three times, but if markets could handle the impact of higher borrowing costs, a fourth rise could follow. Four increases would mark the upper limit of expectations for this year.

If the long-term US interest rate stays at 3.25 per cent, a faster pace of rate rises is expected but this would not affect the US dollar much, he said.

Predee Daochai, president of Kasikornbank (KBank), said the bank estimated that the Fed would raise its benchmark rate three times this year. 

Asian currencies have continued their strength against the backdrop of improved economies and high current and trade account surpluses, Jitipol said.

Meanwhile, Asian currencies may depreciate first in the short term and investors may try to reduce risks to avoid the impact of political pressures in Europe, he said.

Predee said he would monitor the situation after the first of the expected Fed rate rises, possibly in March.

The baht is projected to drop slightly in a range of 30.80-31.20 to the US dollar.

KTB and KBank expect the Thai policy rate to stay put at 1.5 per cent this year.

KBank was unlikely to increase deposit and lending rates in the absence of an economic impact, and there is not high competition for loans, Predee said. 

In response to the growing expectations of four rises in the Fed’s benchmark rate, instead of three as projected earlier, Kulaya Tantitemit, finance inspector-general and spokesman, said that the new market view arose after a statement by the Fed chairman that the central bank would continue to raise interest rates even during US market corrections.

The Fiscal Policy Office (FPO) forecasts that the Fed will increase its federal funds rate by 75 basis points, with move of 25 basis points each time. The first rise is expected in the Federal Open Market Committee’s meeting in March.Xxxxxxxxxx

The Fed’s announcement to raise its rate came after its assessed US economic recovery, reflecting from improved unemployment situation, she said.

The FPO estimates the US dollar to continue its depreciation, despite of US economic improvement, as the US monetary policy has not been certain yet, she said.

Source: http://www.nationmultimedia.com/detail/Economy/30339897