Image courtesy of Kaohoon

The baht, Thailand’s foreign money, hit a three-month low in opposition to the US greenback yesterday, February 14, slipping under 36 to the greenback. This was attributed to greater than anticipated US inflation, which led the market to predict a delay within the Federal Reserve’s first curiosity rate cut, initially expected in Could.

Quoting Kasikorn Analysis Centre, the baht was valued at a low of 36.13 in opposition to the greenback earlier than rising barely to 36.07 to 36.09 baht. That is in contrast to Tuesday’s closing rate of 35.7 baht.

Kanjana Chockpisansin, head of analysis on the assume tank, said, “The baht is transferring consistent with different Asian currencies, as the world gold worth additionally fell under US$2000 per ounce.”

The US greenback and bond yield skilled a pointy enhance following the rise of the US client worth index (CPI) by 3.1% year-on-year in January, beating the two.9% market prediction. The core CPI additionally exceeded expectations, at 3.9% in opposition to a forecast of three.7%.

“These readings would possibly immediate the Fed to keep charges for longer. The market now sees a decrease chance of the Federal Open Market Committee’s first rate cut in Could, solely tallying 35%,” mentioned Kanjana.

Kanjana additionally prompt that the baht might weaken additional with the sluggish decline of US inflation and robust financial knowledge, indicating that the Fed may not cut charges as early as beforehand forecasted, reported Bangkok Publish.

Baht weakening

In accordance to Kobsidthi Silpachai, head of capital markets analysis at Kasikornbank, the US inflation determine was primarily pushed by rising home costs. The market at the moment predicts that the Fed will solely cut the coverage rate 4 occasions this yr, a lower from the preliminary forecast of seven cuts.

In consequence, the Thai and US curiosity rate hole will stay wider for an extended interval, main to an additional weakening of the baht in opposition to the greenback, he mentioned.

By way of volatility in opposition to the US greenback, the baht ranks third amongst regional currencies at 9.56% over the previous three months.

Poon Panitchpibul, a cash market strategist at Krungthai International Markets, anticipates the primary Fed rate cut of the yr in June, which can trigger the baht to weaken additional as the greenback strengthens. Krungthai tasks the baht’s fluctuation to be between 35.66 to 36.10 to the greenback quickly.

Kavee Chukitkasem, head of analysis and content material at Pi Securities, highlighted that the excessive US inflation places strain on the costs of gold, Bitcoin, shares, and debt devices.

“Till the Fed’s assembly in Could or June, we have now to wait and see whether or not the central financial institution cuts charges,” he said.

In consequence, a big inventory market rebound is troublesome to predict over the subsequent few months. Pi tasks the Thai index to transfer inside the vary of 1,350 to 1,400 factors by mid-2024, in accordance to Kavee.

Enterprise Information