Thai Central Bank closely watching as baht romps ahead

THE Bank of Thailand said today (July 25) that it is closely monitoring the financial markets because the Thai baht has been strengthening very quickly and urged the public to protect themselves from exchange rate risks, Thai News Agency said.

 Mathee Supapongse, deputy governor of Bank of Thailand, said the Thai currency has strengthened by 7% since the beginning of this year mainly through the weakening of the US dollar but inflows of direct investment funds was an added push.

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Although overall the Thai currency’s appreciation has been at the same level as regional currencies, lately it has strengthened at a faster pace with this reflecting the market’s sensitivity to short-term fluctuations.

 He added that the Thai central bank is closely monitoring the situation in the financial markets and urged the private sector to consider hedging against exchange rate risks in advance to cope with high fluctuations in the global financial markets.

Currency exchange experts said Thai baht today opened at 33.45 to the dollar, weakening after a pressure to buy US dollar set in, and the rate today should be in the range of 33.40-33.50.

According to a Reuters report published by CNBC, the US dollar languished near a 13-month low against a basket of currencies today, with traders skeptical that this week’s US Federal Reserve meeting would do much to alter the greenback’s recent weak trend.

The Fed is widely expected to keep interest rates unchanged at its two-day meeting that ends tomorrow (July 26). The focus will be on any hints on whether it may raise rates again this year, and when it will begin paring its bond holdings.

Given the recent weakness in US inflation data, the market is guessing that the Fed’s tone will be dovish and this seems to be weighing on the dollar, said Stephen Innes, head of trading in Asia-Pacific for OANDA in Singapore.

 “Without the Fed’s support right now, I think the dollar is just going to wobble,” Innes said, referring to the greenback’s near-term outlook.

The dollar index, which measures the greenback against a basket of six major currencies, eased 0.1 percent to 93.916, trading within sight of Monday’s 13-month low of 93.823.

The euro edged up 0.1 percent to $1.1655, not far from a high of $1.1684 set on Monday, its strongest level in about 23 months.

The dollar’s outlook remains clouded by worries that persistent political disorder would present obstacles to US President Donald Trump’s stimulus and tax reform agenda.

“It’s not as if the driver for the broad direction of dollar weakness has gone away. I don’t think the dollar will keep rising persistently from here,” Kadota said.


Top: A pile of Thai baht. Photo: Peter Hellberg (CC-BY-SA-2.0)

Inset: Chart showing the how various currencies have performed since the end of 2016 up to 8.40 am today (July 25, 2017). Image: Thai News Agency





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