Thai baht gains most in 5 weeks as opposition parties lead vote
The Thai baht advanced to the highest in more than five weeks after opposition parties emerged as the biggest winners in the general election over the weekend.
The baht climbed 0.9 per cent to 33.70 per United States dollar on Monday, the highest since April 5, before paring its gain to 0.5 per cent. Against the Singapore currency, the baht was trading up 0.4 per cent to 25.2765 per Singdollar.
Pro-democracy parties Move Forward and Pheu Thai looked set to win the majority of seats, putting them on course to wrest power from a military-backed government that has ruled for almost a decade.
The baht, which is among the top performers in emerging Asia this year, may get a further boost after economic growth data beat estimates in the last quarter.
“There is a tendency for the Thai baht to strengthen in the weeks following an election,” said ANZ head of Asia research Khoon Goh in Singapore. “Should history repeat, we can expect USD/THB to head lower and potentially test support at the 33.5 level.”
Thailand’s gross domestic product rose 2.7 per cent in the January-to-March period from a year ago, faster than the median 2.3 per cent expansion estimated by economists in a Bloomberg survey.
It may take weeks to months before a clear picture emerges on who will form the government, said Mr Vijay Kannan, a macro strategist at Societe Generale in Singapore.
“We prefer to fade the election-related rally in Thai baht,” Mr Kannan wrote in a note to clients. Once the dust settles, the company may turn more bullish on the currency as the medium-term outlook on Thailand’s balance of payments remains favourable, he said. BLOOMBERG