The Thai baht appreciated to below 35 against the US dollar, influenced by a weakening greenback as markets anticipate a Federal Reserve rate cut following recent US economic data releases.
The baht began Wednesday at 35.03 per dollar, improving from Tuesday’s close of 35.16.
During the morning session, the local currency reached 34.88 baht per dollar, its highest in seven months, surpassing January’s range of 34.96-34.98 baht per dollar, according to Kanjana Chockpisansin, head of research for banking and financial sectors at Kasikorn Research Center (K-Research).
Ms. Kanjana noted that the baht has shown strength not only against the dollar but also against other key global and regional currencies.
She highlighted that this surge is in response to a lower than expected US Producer Price Index (PPI), boosting confidence in a possible Fed rate decrease of more than 0.25 percentage points in September.
Further boosting the baht’s value is the rise in gold prices. K-Research predicts the baht will likely fluctuate between 34.80 and 35.50 baht per dollar this week, reflecting the continuing depreciation of the dollar.
Poon Panitchpibun, a money market strategist at Krungthai Global Markets, also tied the baht’s appreciation to falling US bond yields after new US economic updates were released.
Mr. Poon pointed out that the weaker PPI has bolstered investor confidence in the possibility of up to four Fed rate cuts this year.
The depreciation of the dollar against major currencies and the decrease in the US 10-year bond yield have also supported the increase in gold prices, he added.
“The baht is expected to continue moving in a sideways-up trend this year, largely depending on US economic data and market expectations regarding Fed rate cuts,” said Mr. Poon.
“We anticipate the baht trading in a range of 34.85-35.50 per dollar,” he added.
