Baht eases against dollar after big jump on Friday
THE Thai baht opened at 31.34 baht to the dollar this morning (Jan. 29) after strengthening overnight Friday to 31.30 which is the highest level in 50 months, Thai News Agency reported.
Money managers at Bank of Ayutthaya said although the baht-dollar exchange rate closed at 31.35 in Thailand on Friday, it did strengthen to 31.30 overnight, but they expect the rate to stay within a range of 31.30-31.40 to the greenback today.
They added that the market is watching whether the Bank of Thailand will implement any measures on this key exchange rate. At the same time they are also watching the meeting Federal Open Market Committee, the monetary policy-setting arm of the US Federal Reserve, taking place during Jan. 30-31.
Meanwhile INN News quoted money managers at this same bank as saying that some demand for US dollar is building because the US fourth quarter 2017 growth was 2.6%, and while this is weaker than the 3% expected. it is an important factor that could rein in the selling pressure.
According to a Reuters report published by CNBC, the dollar crawled up from lows this morning but struggled to pull ahead from six straight weeks of losses on its evaporating yield advantage and doubts about Washington’s commitment to a strong currency.
The dollar index against a basket of six major currencies rose 0.2 percent to 89.215, extending its rebound from 88.429, a three-year nadir set on Thursday.
The currency was marginally helped by US GDP data on Friday, which showed strong domestic consumption and capital spending even though the headline figure was weaker than expected due to a rise in imports.
Yet traders expect more headwinds for the dollar, which has been pummeled by renewed worries that President Donald Trump may use currency policy as a tool to press other countries to get better “deals” on trade.
“I don’t see any changes in the dollar’s larger downtrend. But given that US GDP figures showed strong consumption and US bond yields are rising, it’s hard to expect a rapid fall in the dollar against the yen,” said Kazushige Kaida, head of foreign exchange at State Street Bank in Tokyo.
Treasury Secretary Steven Mnuchin gave US currency bears a major boost last week with a tacit endorsement of a weak dollar. While Trump tried to row back from those comments, the damage had already been done and the dollar’s downturn since November showed little sign of abating.
The greenback is also losing its relative yield attraction for investors. Short-term interest rates are expected to rise in other countries as the European Central Bank and many others start to scale back their easy monetary policy.
US equities have one of the most expensive valuations in the world, prompting investors to look for better bargains elsewhere.
Top: A pile of Thai coins. Photo: Thai News Agency
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