The baht has appreciated to below 35 per US dollar, influenced by a weakening dollar as markets anticipate a rate cut from the Federal Reserve following the release of recent US economic data.
On Wednesday, the baht opened at 35.03 per dollar, showing improvement from Tuesday’s closing rate of 35.16.
The local currency continued to gain strength, reaching 34.88 baht per dollar during morning trading—the highest level in seven months—exceeding the January range of 34.96 to 34.98 baht per dollar, according to Kanjana Chockpisansin, head of research for banking and financial sectors at Kasikorn Research Center (K-Research).
Ms. Kanjana noted that the baht strengthened not just against the dollar, but also against other major global currencies and regional counterparts.
This appreciation corresponds with the dollar’s decline following the US Producer Price Index (PPI) falling short of market expectations, which has bolstered confidence in a possible Federal Reserve rate cut of over 0.25 percentage points in September.
Additionally, rising gold prices have further reinforced the baht’s strength against the dollar. K-Research predicts the baht will likely continue its upward trend, moving within a range of 34.80 to 35.50 baht per dollar this week, in accordance with the ongoing depreciation of the dollar.
Poon Panitchpibun, a money market strategist at Krungthai Global Markets, stated that the baht’s appreciation reflects declining US bond yields following the recently released economic data.
The weaker PPI is enhancing investor confidence in the prospect of up to four Federal Reserve rate cuts this year, according to Mr. Poon. He added that the dollar’s decline against other global currencies and the decrease in the US 10-year bond yield have also played a role in increasing gold prices.
“The baht is expected to maintain a sideways-upward trend throughout this year, largely influenced by US economic data and market expectations regarding Federal Reserve rate cuts,” Mr. Poon said.
“We expect the baht to trade in a range between 34.85 and 35.50 per dollar.”
