With the nation’s central bank reportedly maintaining its hawkish position this week, the nascent rebound of the Thai baht is expected to strengthen. This should assist lift the currency out of the rut of prolonged political uncertainty. After falling for three consecutive months, the Southeast Asian currency is expected to rise by around 3% in …
With the nation’s central bank reportedly maintaining its hawkish position this week, the nascent rebound of the Thai baht is expected to strengthen. This should assist lift the currency out of the rut of prolonged political uncertainty. After falling for three consecutive months, the Southeast Asian currency is expected to rise by around 3% in July. While the Federal Reserve’s potential rate peak has contributed to some of the dollar’s depreciation, the Bank of Thailand’s hawkish stance may help the rise last longer. While rate hikes have been on hold for the past few months at the majority of Asian central banks, the BOT has left the door open for another 25-basis point rate hike this week.
Governor of the central bank Sethaput Suthiwartnarueput stated on July 19 that he did not see a need to immediately change the bank’s present “gradual and measured” strategy because the economic recovery was still strong. Given their hawkish remarks, the lagging recovery, and the need to create policy space, the BOT is expected to raise interest rates by 25 basis points at the forthcoming meeting, according to Edward Lee, chief Asean and South-Asia economist at Standard Chartered Bank SG Ltd. in Singapore. This should give the baht gains more traction, especially if the central bank makes hawkish comments. The BOT will raise rates by 25 basis points this week, according to economists at Nomura Holdings Inc. They also anticipate that there may be another increase in September. According to the bank, the baht would increase to 32.9 per dollar in the fourth quarter. At 7:36 a.m. in Hong Kong, the currency was down 0.1%, at 34.269 to the dollar. Since the country has yet to designate a new Prime Minister after the May elections, a rate increase would aid the Asian currency in overcoming challenges posed by political uncertainty.
Pita Limjaroenrat, the head of The Move Forward Party, which garnered the most votes and seats in the legislature, has previously been denied the position of prime minister twice. Even if the BOT votes to maintain rates at its meeting on Wednesday, the increase in foreign arrivals in June likely comfort baht bulls. In addition, the Thai finance ministry forecasts that there will be 29.5 million visitors this year, more than double the 11.2 million who came last year. The baht is expected to increase to 33.5 per dollar in the third quarter before increasing to 33 in the final three months of the year, according to Australia and New Zealand Banking Group. “We’re looking at a combination of a weaker dollar, then on the Thai side a clearing up of the political uncertainty, and supportive factors from the rice export price and also gold,” said Khoon Goh, the bank’s head of Asia research, who is based in Singapore.
Risk Disclaimer:
Please note that this article does not offer any instructions or suggestions regarding investment decisions. Therefore, it is essential that you carefully evaluate your financial situation and conduct thorough analysis, or seek advice from a qualified professional, before making any investment decisions.
