Baht weakens in opening trade

The Thai currency is likely to move between 33.40 and 33.55 during the day, Krungthai Bank market strategist Poon Panichpibool predicted.

Poon said the baht was testing the key resistance level of 33.50 to the dollar due to China’s Evergrande crisis, which caused the dollar to strengthen and the yuan to weaken.

Meanwhile, foreign investors are offloading their Thai assets, but Poon expected the sales to be limited unless an Evergrande default hammers the Chinese economy, which might cause foreign investors to sell their emerging market assets again.

Poon said the baht could weaken from 33.80 to 33.85 to the dollar if it dropped past the resistance level. However, the Thai currency might strengthen from 32.70 to 32.80 if it does not weaken past the resistance level.

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Investors are ready to take more risks despite uncertainties after a key US Federal Reserve meeting produced the expected results. The Fed stuck with its policy interest rate of 0.00 to 0.25 per cent until an economic recovery.

The Fed also signalled that its quantitative easing (QE) programme may decrease soon and it might stop buying assets in the middle of next year.

Chairman Jerome Powell said the QE programme might even decrease in November, but pointed to an interest rate increase after a QE decrease.

The Fed’s dot plot revealed that some central bank officials support an increase in the interest rate in 2022, while most officials back a rise in 2023 and 2024, which is more than the market expected.

Poon added that investors are not fully open to taking risks because they are awaiting a solution to Evergrande’s massive default.