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18 Nov 2020

Econ Digest

Thai Baht appreciated 3.4% after foreign capital flowed into Thai stock and bond markets with the highest volume in 17 months in the wake of Biden’s victory in the US presidential election

 

Preliminary results show that Joe Biden from the Democratic Party has been elected the 46th President of the US, leading to a major shift in investment portfolios around the world. Thai stock and bond markets are among Asian money and capital markets that benefited from this shift of investment.

 

During November 1-17, 2020, foreign capital flowing into the Thai bond market reached THB46.2 billion, and foreign investors recorded a net buying position of THB25.6 billion in the Thai stock market after net-selling for 15 consecutive months (staring from August 2019), while the Thai stock index (the SET) increased 13%.

 

Foreign capital has flowed into Thai stock and bond markets in the same time (combined with the weakening US dollar along with the signals of the Federal Reserve (Fed) for monetary easing and Thailand’s current account surplus), causing the Baht to appreciate significantly. The Baht has already strengthened approximately 3.4% since the beginning of November 2020 to THB30.16/USD as of November 17, 2020.

 

The situation of the Baht appreciation is becoming a factor that is being closely monitored by both export operators and related government agencies, as it may affect the recovery path of the Thai economy in the future. Therefore, the important factors to be monitored will be Baht management measures and domestic political issues. Meanwhile, the US dollar is still influenced by the signal of monetary policy stance by the Fed, the COVID-19 situation and Joe Biden’s push for US economic policy in future.

 


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Econ Digest