Krungsri Forecasts Baht Trading Range of 31.55-32.15 baht/Dollar This week
HOONSMART.com >> Krungsri (Bank of Ayudhya) anticipates the baht will trade between 31.55 and 32.15 baht per US dollar this week. This follows a closing rate of 31.84 baht/dollar last week, which saw fluctuations between 31.66 and 31.96 baht/dollar. The baht depreciated slightly against the Euro but appreciated against the Yen.
The forecast comes after the Federal Reserve (Fed) lowered interest rates by 25 basis points to a range of 4.00-4.25%, with one dissenting vote favoring a 50 basis point reduction. The Fed’s ”dot plot” suggests potential for two further interest rate cuts this year, aligning with investor expectations. While citing labor market conditions as justification for the rate cut, the Fed statement also acknowledged increasing inflationary risks, remaining at a relatively high level.
Fed Chair Jerome Powell indicated that recent weak employment figures reflect a decrease in labor supply due to demographic shifts, rather than a significant economic downturn. The lack of stronger support for a 50 basis point cut disappointed some market participants. The Bank of England (BOE) and the Bank of Japan (BOJ) both maintained their existing interest rate policies.
Investor activity in the Thai market saw net sales of 5,066 million baht in Thai stocks, offset by net purchases of 8,506 million baht in Thai bonds.
This week, market focus will be on further commentary from the Fed and the release of US inflation data for August (PCE). Krungsri analysts believe the recent dollar recovery following the Fed meeting reflects a temporary shift in investor positioning, driven by expectations of further rate reductions. Potential influence from a possible future administration led by Donald Trump on Fed policy in 2029 is also noted. Political uncertainty in Japan, ahead of the Liberal Democratic Party (LDP) leadership election on October 4th, may also pressure the Yen.
Domestically, the Bank of Thailand (BOT) has stated it is closely monitoring the baht and actively managing the market, evidenced by an increase in international reserves. The BOT currently has no plans to implement a gold tax, preferring further discussion on the matter. The central bank attributes the recent baht gratitude to a weakening US dollar, alongside Thailand’s current account surplus and political factors.
