The baht hit its strongest level in 7 and a half months at 34.45 baht per dollar this morning (10.19 am), compared to the market close at the end of last week at 35.03 baht per dollar after the second quarter GDP expanded more than expected and awaited the new cabinet.
Ms. Kanchana Chokpaisansin, Research Director, Kasikorn Research Center, said that the baht strengthened in line with the direction of most Asian currencies and the movement of gold prices in the world market, which remained above the $2,500 per ounce level. Meanwhile, the dollar sentiment still lacks support because the market is still focused on the possibility of the Fed cutting the policy interest rate at the meeting in September.
In addition, the baht should have additional positive factors after Thailand’s Q2/2024 GDP figures expanded better than the market’s forecast, expanding +2.3% YoY, higher than the market’s expectation of 2.2% and higher than the 1.6% expansion in Q1/2024.
For the baht’s movement framework today, the initial as
sessment is 34.40-34.80 baht per dollar, while important factors to monitor include the market’s response to Thailand’s Q2/2024 GDP figures, foreign capital trends, political issues and signals about the new government’s economic policies, including the US July Leading Economic Index and statements from Fed officials.
Mr. Poon Panichpibul, strategist of money and capital markets, Krungthai GLOBAL MARKETS, said that since last Friday, the baht has gradually appreciated. The reason is that the US economy is still bright, reducing the attractiveness of holding the dollar, pressuring the dollar to gradually weaken. This has caused the baht to be supported by both the weakening of the dollar and the flow of gold profit-taking transactions after the price of gold has gradually adjusted upwards until it has reached a new all-time high.
While the report on Thailand’s Q2/67 GDP, especially government investment and disbursement, showed that it would expand better, it may affect the view of the economic outlook and t
he direction of the monetary policy of the Monetary Policy Committee (MPC) in the meeting this Wednesday. As for the MPC meeting, it is estimated that the MPC will maintain the policy interest rate at 2.50% and may not yet send a clear signal about the tendency to gradually reduce the policy interest rate if the Thai economy continues to expand well and tends to be in line with the MPC’s forecast.
As for politics, we should follow the formation of the new cabinet to assess whether this will affect the government’s spending and investment trends, including important government policies such as Digital Wallet.
“The baht’s trend is that the momentum of appreciation is still there, but it may slow down a bit, causing the baht to have the opportunity to fluctuate and weaken if the formation of the new cabinet tends to be delayed. The baht’s range today is expected to be at 34.45-34.70 baht/dollar,” said Mr. Poon.
Source: Thai News Agency