Baht weakens against dollar as expert warns of volatility from US inflation data
The baht opened at 34.85 to the US dollar on Friday, weakening from Thursday’s close of 34.69.
The currency will likely move between 34.70 and 35.00 against the greenback during the day, Krungthai market strategist Poon Panichpibool said.
Poon cautioned the baht could fluctuate in a wide range after it weakened against the strengthening dollar and gold purchases. The baht will continue to weaken if the currency market remains in a risk-off state and foreign outflows from the Thai stock market persist, he added.
However, the baht is unlikely to breach its resistance level of 35-35.20 easily because investors including exporters are waiting to sell the dollar when the baht weakens while foreign investors may short the currency in expectation of baht strengthening, Poon said.
He warned to beware of currency market volatility before and after the US personal consumption expenditures (PCE) report, the US Fed’s preferred measure of inflation, is released on Friday (US time). Higher-than-expected PCE figures will put pressure on the dollar. Poon said the baht may strengthen as a result, but he was sceptical it would exceed its support level of 34.5 to 35.6.
He also advised investors to use hedging tools such as options to manage risks in a highly volatile currency market.
