Baht ‘might continue strengthening’ if market remains in risk-on state
The baht opened at 36.95 to the US dollar on Wednesday, the lowest since September 20, strengthening from Tuesday’s close of 37.27.
The currency will likely move between 36.80 and 37.10 against the greenback during the day, Krungthai market strategist Poon Panichpibool predicted.
He said the baht strengthened quicker and more than he expected after the market went into a risk-on state the previous night.
It pressured the dollar to weaken while investors sold gold for profit after the price of the precious metal climbed to near its resistance level, Poon said.
All this has caused the technical graph of the baht to change in the short term. If the market continues to be in a risk-on state, the baht might strengthen to near its new resistance level of 36.80 to 36.90 to the dollar, he believed.
Moreover, the strengthening of the baht “might affect exporters psychologically” and influence them to adjust the level they are waiting for to sell the dollar – from 38 or higher to 37.50-37.70, which will lower the baht’s resistance level, Poon said.
However, he suggested being cautious of the currency market as investors might not be in a hurry to adjust their possessions before the US midterm election and Thursday’s consumer price index inflation data is made public.
Poon advised investors to use hedging tools such as options to manage risks in a highly volatile currency market.
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