Poon said the baht might fluctuate heavily until the US Federal Reserve’s key meeting on the interest rate.

He explained that the baht has weakened because the dollar advanced due to signs that the Fed would increase the rate.

Investors and analysts expected the Fed to increase the rate by 0.75 per cent in June and July, which might cause investors to “sell on fact”, Poon said, adding that the dollar could head lower if the Fed does not signal a big rate increase or voices concern about the economy.

As the baht weakens past the 35 mark, it might force worried business operators, especially exporters, to purchase the dollar, which would cause the Thai currency to fluctuate between 35.10 and 35.15, he said.

The weakening might be limited because exporters’ “selling power” and the Bank of Thailand, which could move to control the currency’s volatility, Poon said.

With Thai bond yields increasing recently, some foreign investors might be interested in purchasing these bonds again, which would also limit the weakening of the baht, Poon believed.

He felt the baht will not weaken easily to the new resistance level of 35.50 or test the 36 mark if the market does not significantly close to risks of Emerging Asia assets, which would occur only if the lockdown is widely enforced in China.

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