Bangkok: The baht touched its strongest level in more than seven and a half months, reaching 32.38 baht per dollar this morning before adjusting back to a range of 32.40-32.42 baht per dollar. This compares to a closing level of 32.58 baht per dollar last Friday as market participants await April’s export figures, which are expected to grow by more than 12%.
According to Thai News Agency, the baht’s strengthening aligns with net buying signals of Thai bonds by foreigners and the appreciation of other Asian currencies. Simultaneously, the US dollar faced selling pressure as the dollar index fell below the 99 level, hitting its lowest point in about a month. This occurred after US President Donald Trump postponed the enactment of 50% tariffs on the European Union from June 1 to July 9. The baht’s movement today is initially estimated at a range of 32.30-32.70 baht per dollar, with key factors to be monitored including Thailand’s April export figures, global gold prices, foreign fund flows, and ongoing trade war issues.
Mr. Poon Panichpiboon of Krungthai GLOBAL MARKETS at Krungthai Bank noted that the baht strengthened as the dollar declined, coinciding with a rise in gold prices, which surpassed a short-term resistance zone of 3,350 dollars per ounce. However, during the Asian market morning session, the stable dollar and profit-taking in gold pressured its price downward, impacting the baht’s strength.
Last week, despite US economic data exceeding expectations, which led market players to believe in limited future rate cuts by the Fed, concerns about US fiscal stability continued to weaken the dollar by around -2%. Key US economic data and statements from Fed officials, particularly Chairman Jerome Powell, are anticipated this week.
In Thailand, analysts forecast April export growth to exceed 12% due to preemptive import acceleration ahead of US trade barriers, with imports expected to grow by around 7%. However, the substantial export growth does not indicate a similar expansion in industrial production. Structural issues and competition from cheap Chinese products are expected to contract the Industrial Production Index by 3.5%, with the capacity utilization rate at approximately 63%.
Market players are advised to adopt broader hedging strategies against exchange rate volatility. The baht’s appreciation momentum is stronger than previously assessed, with expectations of a trading range between 32.15-32.95 baht per dollar this week, suggesting the use of tools such as Options or Local Currency alongside Forward contracts for hedging.