The Thai currency fell to B36.99 to the greenback on Thursday (June 27), the lowest in two months, from Wednesday’s close of B36.82, reports the Bangkok Post.
The yen slid past the key 160-per-dollar level to a 38-year low, while currencies in the region were largely subdued as the dollar strengthened overnight amid prospects that US interest rates may stay higher for longer.
The baht has softened by 7.7% this year to date, partly because of continued outflows from the Thai stock and bond markets, said Kanjana Chockpisansin, head of the research, banking and financial sector at Kasikorn Research Center.
“We now see B37.25 to the dollar as a key resistance level for the baht,” she told the Bangkok Post, adding a targeted range in the third quarter is B36-37 to the greenback.
Kobsak Pootrakool, chairman of the Federation of Thai Capital Market Organizations (Fetco), said the baht has weakened from 36 to the dollar to near 37 now, compared with 34.14 to the dollar at the close of 2023. The currency is likely to slide further as global volatilities linger, said Mr Kobsak.
As the European Central Bank, Bank of England, Swiss National Bank and Bank of Canada have begun to trim their interest rates, all eyes are on the Federal Reserve as the US economy remains sound, he said.
However, the Bank of Thailand is unlikely to cut interest rates this year, according to analysts.
“Views are spilt on the possibility of one or two Fed rate cuts this year. Economic figures signal it may not be easy for the Fed to cut rates twice in 2024,” Mr Kobsak told a forum Fetco jointly hosted with the Thai Bond Market Association (ThaiBMA) yesterday.
“It’s just a matter of time before the Fed starts actually cutting the US rates. When central banks around the world begin to trim rates in unison, the whole process could take 1.5-2 years to get the work done.”
Visit Ongpipattanakul, managing director of Trinity Securities Group, said foreign investors have sold B100 billion in Thai shares this year.
Although outflows have begun to subside, as the Thai economy bottomed out in the first quarter and should begin to recover from the second quarter, statistics indicate Thai and other Asean equities normally decline prior to US presidential elections since 1996.
Somjin Sornpaisarn, president of the ThaiBMA, said foreign investors were net sellers of B60bn in Thai bonds in the first half of 2024, following net sales of B140bn last year. The outflows are likely to continue as the yield gap between US and Thai bonds remain significant, he said.