The Thai baht is expected to experience increased volatility this week, driven by domestic political instability and anticipation of a US policy rate cut later this month.
Kasikorn Research Center (K-Research) predicts the baht will fluctuate within a broader range of 31.80 to 32.80 baht per US dollar, influenced by both internal and external factors.
On the home front, political developments remain a key concern as the House of Representatives prepares to elect a new prime minister. Political uncertainty heightened over the weekend following the recent dismissal of Prime Minister Paetongtarn Shinawatra.
Last Friday, the Constitutional Court ruled against Ms. Paetongtarn after reviewing leaked audio of a phone call she had with Cambodian Senate President Hun Sen, further complicating the political landscape.
“The uncertain outlook for Thai politics could lead to short-term foreign capital outflows,” K-Research noted.
Over the past week, foreign investors sold Thai equities worth 12.3 billion baht but recorded a net inflow of 2.62 billion baht into the bond market.
The baht opened this Monday at 32.32 against the US dollar, slightly stronger than last week’s levels, and has appreciated gradually since Friday evening, nearing a support level of 32.30, amid a weakening US dollar, according to Krungthai Global Markets, the research arm of Krungthai Bank.
Market participants remain cautious about potential political interference in the US Federal Reserve’s operations, which has led investors to increase expectations of a rate cut by the Fed, said Poon Panitchpibun, a money market strategist at Krungthai Global Markets.
In Thailand, attention is focused on political developments to assess the prospects for forming a government and potential parliamentary discussions. The ongoing political uncertainty could lead to a new election either by the end of this year or in early 2026.
“We expect the baht to remain volatile against the dollar, likely moving within a range of 32.00 to 32.75 this week,” Mr. Poon stated.
Additionally, Krungsri Global Markets forecasts a wider trading range of 32.00 to 32.65 for the baht against the US dollar, compared to last week’s range of 32.27 to 32.56.
The currency is anticipated to stay volatile, driven by domestic political tensions, US Federal Reserve policy prospects, upcoming Thai economic data releases, and potential US political interventions, including those from President Donald Trump, according to Krungsri Global Markets.