Baht falls to 7-month low
The baht has again weakened to 35.60 to the US dollar in a continuation of the trend that has been prevalent over the last seven months.
According to Krung Thai Bank's currency analyst, Poon Panitpiboon, the exchange rate opened yesterday (June 29) at 35.60 baht/US dollar, breaching the resistance level of 35.50 the previous day.
The main factors for the baht's depreciation include the flow of gold purchases during a contraction phase and the purchase of foreign currency, particularly the US dollar, by importers and multinational corporations (MNCs) at the end of the month, Poon added.
However, despite the depreciation surpassing the expected resistance level at the beginning of the week, foreign currency analysts believe that if there is no strong selling pressure on Thai assets, the baht will not significantly weaken. A new resistance level of 35.75 baht/dollars is expected.
Poon cautioned investors into reading too much into the volatility of the currency market, pointing out that economic data reports from the US including the number of unemployment benefit claims are expected soon. If the figures exceed expectations and reflect a slowdown in the US labour market, there will be questions as to whether the US Federal Reserve can clearly raise interest rates, which could result in a contraction of the US dollar.
