Baht advances but could be affected by results of key US Fed meeting
The baht opened at 37.76 to the US dollar on Wednesday, strengthening from Tuesday’s close of 37.74.
The currency will likely move between 37.65 and 37.95 against the greenback during the day, Krungthai market strategist Poon Panichpibool predicted.
He said the baht strengthened more than he expected due to a series of factors – the weakening of the dollar, hopes that the Chinese government would ease its Covid restrictions, the increasing gold price, and over 6.1 billion baht in foreign transactions involving Thai stocks.
However, these supporting factors might decrease or disappear if investors remain unsure whether the US Federal Reserve would slow its interest rate increases.
Poon warned investors to beware of market and stock volatility during the Fed chairman’s press conference.
He expected the market not to get too shaken up with the results of the Fed’s key meeting and has acknowledged that the Fed might increase the interest rate by 0.75%.
If the Fed chairman does not clearly signal a move to slow its interest rate increases in the future or does not show concern for the US economy, the baht might weaken as the dollar would strengthen.
Poon said the baht’s new support level is between 37.60 and 37.70 to the dollar, while the resistance level is between 38.20 and 38.30 if the Thai currency exceeds the 38 level.
It might weaken to 38 if the market fluctuates during the Fed press conference, Poon added.
He advised investors to use hedging tools such as options to manage risks in a highly volatile currency market.
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