The Thai baht (THB) opened this morning at 36.80 baht per dollar, slightly reinforced compared to previous levels. The US stock market is facing risk, and market players believe the Federal Reserve (Fed) may cut interest rates twice this year. The European stock market fell after market players began selling French stocks. The US 10-year bond yield fell to 4.44% and may fluctuate around 4.40%-4.50%. The value of the dollar gradually fell, and the overall dollar index (DXY) based on gold prices fell to 105.7 points. Market players are waiting to assess the Fed's outlook for monetary policy and key US economic data. The Caixin PMI report on China's services sector is awaited. The trend of the baht is uncertain and may fluctuate within a wide range. The baht is prone to volatility, and market players must use different strategies to hedge risks. The expected range for the baht is 36.75-36.90 baht per dollar [2c5e8781].
The Thai baht's value has been impacted by various factors, including capital outflows, seasonal factors, delay in passing the budget, and rising government debt. These concerns have put pressure on the baht's value and are being closely monitored by international rating agencies. However, there are expectations of improvement in the baht's fundamental factors over the year, such as rising exports and an expanding current account surplus, which could potentially strengthen the currency [0e7d8f62].
The US has decided to impose sanctions on several Hong Kong companies, and G7 leaders are preparing to invite China to stop supporting Russia in its war with Ukraine. In addition, the Bank of Japan (BOJ) monetary policy meeting is scheduled for tomorrow [49c2a85e].
The health of Asian currencies has been making headlines lately. The Japanese yen has depreciated to the lowest in 38 years at 160 to the dollar. Other Asian currencies also weakened sharply as the dollar has strengthened. The Philippine peso, Korean won, and Indian rupee are near historic lows. The baht has weakened by 6.5% to around 36.90 per dollar. The main reason for this weakness is the US economy is still stronger than expected. The US economic picture, as measured by the Purchasing Managers' Index (PMI), is still quite strong compared with other economies such as Europe. In the big picture, the world economy is showing signs of a synchronized recovery. Political risk is a concern in India, where Prime Minister Narendra Modi was unable to secure an outright majority in the recent election. Geopolitical risks in countries other than the US are partly causing assets elsewhere to be sold off. Divergence between monetary policy in the US and elsewhere is a factor. In the rich world, central banks have started reducing policy rates. We predict the baht will weaken further to 37.50 per dollar in the third quarter. The market is beginning to think the Fed will reduce interest rates, allowing the baht to strengthen in the fourth quarter. The yen is likely to weaken based on the interest rate difference with the US. Chinese authorities are likely to allow the yuan to depreciate slightly to help the economy. A weak yen and yuan will put pressure on the baht to continue depreciating over the next one or two months. Baht volatility will increase given market perspectives on the direction of US monetary policy. Businesspeople and investors whose transactions involve international currencies must be vigilant and strictly hedge currency risk [8654d9d1].