Baht opens 34.58/dollar on Wed but all eyes on Fed meeting
The baht opened at 34.58 to the US dollar on Wednesday, strengthening from Tuesday’s close of 34.80.
The currency will likely move between 34.50 and 34.70 against the greenback during the day, Krungthai market strategist Poon Panichpibool said.
Poon said that the baht strengthened quickly last night amid dollar weakening and gold sales after its price breached the resistance level.
However, baht strengthening will slow as investors wait for results of the US Federal Reserve meeting on interest policy on Thursday morning (Thai time), he added.
He said the baht might strengthen today before the meeting results as the market is in a risk-on state with investors buying Thai short and long-term bonds as US bond yield falls.
Poon estimated the baht’s key support level at 34.50 to the dollar.
He expected a stronger dollar and higher US 10-year bond yield if the Fed takes a “hawkish” view and raises its policy rate in line with a peak level beyond 5.00%.
However, he doubted baht would weaken past its resistance level at 35 as most investors are waiting to sell the dollar or short the dollar-baht market.
Poon also advised investors to use hedging tools such as options to manage risks in a highly volatile currency market.
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