Weakening baht to remain volatile until November-end, say currency analysts
The baht would face short-term volatility until the end of November due to funds flows into the US after Donald Trump won the presidential election, several currency analysts said on Friday.
Trump’s victory in the US election in early November led to currencies other than the dollar weakening. The baht depreciated from 33.71 against the dollar to 35.00 as of Friday, the weakest in three months.
Amornthep Chawla, the chief economist at CIMB Thai Bank, expects the weakening baht to reach 36.00 against the dollar in the middle of December due to Trump’s policy to reduce corporate tax for US-based companies.
The policy has triggered fund flows into the US markets, especially the stock market, he said.
However, he did not expect a prolonged weakening of the baht, saying that the baht would strengthen after the US Federal Open Market Committee’s meeting and once Trump officially takes his position.
The clarity on the US interest rate and Trump’s policies could relieve uncertainties among investors, he added.
Sanguan Jungsakul, head of investment and markets research at Krungthai Bank, pointed out that the baht continued to weaken and be volatile due to Trump’s victory and the strengthening dollar.
However, he expects the baht volatility to remain in the short term until the end of November. He also predicts the baht to move between 34-35.25 against the dollar during the period.
The baht is expected to gain momentum once November ends, he said.
Kanchana Chokpaisansin, research director at Kasikorn Research Centre, said the baht had weakened since the prediction of a Trump victory and the likelihood of the US Federal Reserve slightly reducing the interest rate, triggering mass buy-ups of the dollar.
She said the baht moved to 35.00 baht on Friday amid concerns Trump’s presidency would increase inflation while the interest rate would drop slightly. The weakening baht also aligns with the depreciating Chinese yuan amid fears of a US-China trade war, she added.
Kanchana expects the baht to weaken in the short term to around 35.35 against the dollar, adding that the baht could be able to weaken to 35.50 against the dollar.
