The baht moved within a narrow range of around 32.92-32.97 baht/dollar this morning (09.40 hrs.) after reaching a 19-1/2 month high of 32.91 baht/dollar on Friday night. Krungthai sees a chance of strengthening this week to 32.60 baht/dollar.
Ms. Kanchana Chokpaisansin, Research Manager, Kasikorn Research Center, said that the baht appreciated as a result of the increase in the price of gold in the world market and the statement of the US Federal Reserve (Fed) officials, which reflected that the Fed is still likely to continue to reduce the policy interest rate in the future. However, the baht’s appreciation may start to slow down somewhat this morning in line with the direction of Asian currencies, led by the yen, which weakened slightly after the Bank of Japan (BOJ) governor indicated that there is no need to rush to raise interest rates in the near future.
For the baht’s movement range today, the initial assessment is 32.85-33.10 baht/dollar, while the important factors to monitor are the direction of foreign capital, the Asian currency situation, the world gold price, and the preliminary PMIs for September in the UK, the Eurozone, and the US.
Mr. Poon Panichpiboon, Krungthai GLOBAL MARKETS, Krungthai Bank, said that since last Friday, the baht has gradually appreciated and successfully broke through the estimated support zone of 33.00 baht/dollar (fluctuating within the range of 32.90-33.15 baht/dollar), supported by the flow of gold profit-taking transactions after the price of gold was able to continuously adjust upwards, reaching a new all-time high of over 2,600 US dollars/ounce. The price of gold is still supported by the conflict situation in the Middle East that is still heating up. At the same time, market players are probably expecting that the Fed will be able to cut interest rates faster than stated in the latest Dot Plot.
For the baht’s trend, it is believed that the baht’s appreciation momentum is still there, but it is starting to see a chance that the baht may slow down its appreciation if the dollar really rebounds. In addition, foreign investors have started to gradually sell to make profits from holding Thai assets, especially Thai stocks. We have to wait and see what the report on international trade figures (Exports and Imports) for August will be like. The baht’s range this week is seen at 32.60-33.30 baht/dollar.
‘We maintain our recommendation that market players should choose a wider range of instruments to hedge foreign exchange risks amid the volatility of the baht and other currencies, which is considerably higher than in the past. Market players may choose to use additional instruments such as Options or Local Currency, along with hedging through Forward contracts,’ said Mr. Poon.
Source: Thai News Agency