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25 Apr 2019

Financial Institutions

The Baht Weakens Past THB32.00/USD Again…Regional and Political Factors May Pressure Thai Currency Ahead (Current Issue No.2985)

          The Baht weakened past THB32.00/USD, moving within a range of THB32.02-32.09/USD on April 25, 2019, representing the weakest level since the beginning of 2019 and declining by approximately 1.5 percent from that reported one month ago. The softening Thai currency was consistent with cautious stance of foreign investors in the Thai financial market, as reflected in their net sell position in the Thai bond and stock markets at THB18 billion during one month after the general elections in Thailand. An important factor that has been monitored closely in the Thai financial market after the general elections is political situation and clarity towards the setting of a new government.

            When compared the Baht with other regional currencies, it has been found that the Thai currency remains weak in line with currencies of our neighboring countries due to the impacts of the global economic slowdown on exports and the economy overall. In addition, the US Dollar has strengthened (after being heavily pressured by the Fed's signals to keep the Fed Funds rate unchanged during the remainder of 2019 at the FOMC meeting held in March 2019) because many key US economic indicators did not come out as unfavorable as expected by the markets, suggesting that US economic fundamentals are relatively sound.

            ​Looking ahead, we at KResearch have assessed that factors that may affect the Baht (aside from domestic politics) include environment in the regional forex markets, given that several Asian currencies, namely South Korean Won, Malaysian Ringgit and Indian Rupee, which have weakened substantially now are all being pressured by concerns towards the sluggishness in their export sectors, domestic political factors and downside risks to their economies if global crude oil prices are on the upside trend. Since such risks may prevail later on, entrepreneurs in international trade are advised to thoroughly study and use appropriate tools in hedging against forex risks, so that they can minimize the impacts of the Baht's volatility in line with other regional currencies.    

Financial Institutions