Bangkok: The Thai baht weakened to its lowest level in nearly two months, reaching 31.88 per dollar before closing at 31.74. Kasikorn Bank and Siam Commercial Bank attribute this fluctuation to falling gold prices and a strengthening dollar.
According to Thai News Agency, the Kasikorn Research Center highlighted that the baht's decline was in line with the weakening Japanese yen and the drop in global gold prices. This trend comes as the market anticipates the Federal Reserve will maintain current interest rates. The Siam Commercial Bank (SCB) forecasts that the baht will fluctuate between 31.40 and 31.90 baht per dollar, while closely monitoring fund flows, the Bank of Thailand's monetary policy, and upcoming Thai elections.
Ms. Kanjana Chokpaisalsilp, Research Executive at Kasikorn Research Center, noted that the baht's recent weakness was influenced by market expectations of steady US interest rates, following better-than-expected US services PMI data. Despite foreign investors being net buyers of Thai stocks, there was a net outflow from the Thai bond market.
For the upcoming trading day, the baht is estimated to trade within a range of 31.60 to 31.90 per dollar. Key factors to watch include foreign fund flows, movements in Asian currencies and gold prices, and the preliminary US consumer confidence index for February.
Patrick Pulia, Senior Vice President at Siam Commercial Bank, pointed to high volatility in January due to fluctuating gold prices and US policies impacting the dollar index. He suggested that the baht could fluctuate between 31.40 and 31.90 per dollar, with sideways movement in gold prices reducing pressure on the baht. He also mentioned the potential for the Bank of Thailand to adopt a more relaxed monetary policy stance, which could influence Thai bond yields and the baht exchange rate.
Pulia also noted that the upcoming Thai elections could introduce further volatility. A swift formation of the government might not significantly affect the baht, but delays or unexpected outcomes could weaken it beyond 32.00 baht per dollar. Conversely, a rapid rise in gold prices could strengthen the baht, similar to the situation in January.