Baht could continue strengthening to 37.50: market strategist

The currency will likely move between 37.50 and 37.75 against the greenback during the day, Krungthai market strategist Poon Panichpibool predicted.

He said market concerns that the US Federal Reserve might increase the interest rate at the end of the year have eased, which has led to a weakening of the dollar.

Meanwhile, the gold price is increasing and foreign investors have returned to purchase long-term bonds worth 6 billion baht for the first time in several weeks.

These factors have caused the baht to strengthen more than expected and exceed its support level of between 37.80 and 37.90 to the dollar, Poon said, adding that the baht might strengthen even more and head past its next support level of between 37.40 and 37.50 if these factors remain.

However, he warned investors to beware of market volatility as results of a key European Central Bank (ECB) meeting are announced.

Investors might sell the euro for profit and cause the currency to weaken if the ECB does not signal a rapid increase in the interest rate or shows concern for an intensified economic slowdown, even though the bank is expected to increase the rate by 0.75 per cent, he said.

Poon advised investors to use hedging tools such as options to manage risks in a highly volatile currency market.