The Global Markets group at Bank of Ayudhya (BAY) expects the baht to move in a range of 33.00-33.60 baht per dollar this week, compared with last week when the baht closed weaker at 33.31 baht per dollar after trading in a 33.08-33.43 range. The dollar strengthened against all major currencies after the US Federal Reserve voted unanimously to raise its policy rate by 25 basis points to a range of 3.75-4.00%, the first hike in three years, while the Bank of England held rates at 3.75% by a 6-3 vote and the Bank of Japan raised rates to 1.25%. Foreign investors sold 5.192 billion baht of Thai stocks and 7.552 billion baht of Thai bonds respectively. For the overall picture this week, Krungsri Global Markets sees that although the Fed is expected to raise rates one more time this year, rates in several major economies are also on an upward path. In the short term, the dollar may continue to strengthen if crude oil prices rise significantly, while the market is cautious about downside risks for the euro from rising political uncertainty in France. The yen faces the risk of some profit-taking during this period. As for domestic factors, pressure for Thailand to raise its policy rate remains fairly limited, while the baht may weaken briefly amid the upward trend in global interest rates and volatile commodity prices. Although electronics exports are being supported by the technology cycle, high import costs, low economic growth and the direction of interest rate differentials are not yet conducive to a stronger baht for some time to come.
Bank of Ayudhya PCL
