Thailand: Baht could weaken amid Russia-Ukraine war, Fed’s tighter monetary policies

The baht opened at 33.58 to the US dollar on Thursday, weakening from Tuesday’s close of 33.43.

Krungthai Bank market strategist Poon Panichpibool predicted the Thai currency would move between 33.50 and 33.70 during the day.

Poon said the baht might swing sideways in a wide range. The currency may weaken during the day as the dollar strengthens due to market worries surrounding the Russia-Ukraine war and the US Federal Reserve’s move to implement tighter monetary policies. Moreover, the Covid-19 situation in China has also affected investment in Asia, he pointed out.

Additionally, the baht might fluctuate as the European Central Bank (ECB) holds a key meeting. If the ECB signals that it will increase the interest rate, the euro might strengthen and pressure the dollar into weakening.

Poon advised a close watch on foreign transactions. He expected foreign investors to continue purchasing Thai assets, which would support the baht and keep it from weakening further during this period.

Poon said the baht’s resistance level would be 33.70, at which point exporters would offload the dollar. Meanwhile the key support level is 33.20, which would spur importers to purchase dollars.

Amid high volatility in the currency market, businesses should use hedging tools such as options to manage risks, he added.


Published : April 07, 2022