Bangkok: The baht continues to show signs of weakness, with expectations mounting that the Monetary Policy Committee (MPC) will implement further interest rate cuts. Trading between 32.53 and 32.55 baht per dollar this morning, the baht mirrors its previous closing price, suggesting ongoing fluctuations in the currency market.
According to Thai News Agency, the Kasikorn Research Center noted the baht’s dip beneath the 32.50 mark after a brief appreciation post-MPC meeting. The meeting had maintained the interest rate, reflecting the MPC’s concerns over an economic slowdown, which many believe will prompt future rate reductions. Meanwhile, the US dollar is gaining strength, buoyed by Federal Reserve minutes highlighting ongoing inflation concerns and expectations for further rate cuts in the US. The dollar’s position is further bolstered against the yen, which is under pressure due to the Bank of Japan’s stance on interest rates.
Market strategist Mr. Poon Panichpibul from Krungthai GLOBAL MARKETS, Krungthai Bank, emphasized that the baht’s depreciation above the 32.50 baht per dollar resistance level is constrained by dollar selling activities from market players, including exporters. Although the MPC maintained the rate at 1.50%, contrary to the anticipated 25bps cut, market confidence remains that further cuts will occur, potentially lowering the policy rate to 1.00% next year.
The outlook for the baht suggests a strong depreciation momentum, with a potential downward trend in the short term. A breach of the 32.50 baht per dollar resistance could lead to further weakening, possibly testing the 32.65 resistance, especially with additional pressures like gold price corrections. However, sustained movement beyond this point may face challenges from market interventions.
While the dollar’s recent appreciation has stalled due to a lack of fresh market drivers, the baht’s depreciation may not be immediate unless new factors emerge. Political developments in France and Japan have already influenced the dollar’s rise. In the absence of new data, the baht’s movement is expected to remain within the 32.45 to 32.65 baht per dollar range over the next 24 hours.