Thailand: Baht falls to 9-month low, broader market rebounds

  • The baht hit a near nine-month low on 22 Jun 21, extending losses for a seventh straight session, as the US Federal Reserve’s recent hawkish turn continued to weigh on the currency.
  • The baht, which has come under pressure along with its regional peers after the Fed last week indicated earlier than expected policy tightening, dipped to its lowest since 30 Sep 20.
  • “The baht’s recent weakening is largely due to the US Fed’s recent hawkish pivot, likely exacerbated by Thailand’s already weak economic fundamentals due to the virus situation,” said Dhiraj Nim, FX strategist at ANZ Research.
  • Investors are also awaiting a Bank of Thailand meeting on 23 Jun 21, where the central bank is expected to keep its policy rate at a record low, but likely cut its economic growth outlook.
  • Several other currencies in the region benefitted from a weaker US dollar, however, as investors looked ahead to a testimony from Federal Reserve Chairman Jerome Powell.
  • “We are keeping a lookout for if Fed officials will attempt to reassure markets that the Fed is not about to start a tightening cycle pre-emptively,” said Christopher Wong, senior FX strategist at Maybank.
  • “However if there is none…and instead more hawkish talk, then dollar’s rise could weigh on AxJs (Asia except Japan).”

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