Baht Bounces Back: Thai Currency Strengthens in Line with Regional Markets, Eyes on Fed’s Anticipated 0.25% Rate Cut
Baht Strengthens Against US Dollar Amid Global Market Trends
A money manager from the Bank of Ayudhya revealed that the baht closed at 33.74 baht/dollar, strengthening from the morning’s opening at 33.81 baht/dollar.
Today, the baht moved in the same direction as regional currencies, with a range of 33.67-33.81 baht/dollar. The market reacted more to foreign factors, particularly the US Federal Reserve’s (Fed) potential interest rate cut of 0.25% at next week’s meeting, following the release of the US core inflation rate (Core CPI) in August, which came out higher than market expectations.
“The government’s policy statement had a limited effect on the currency’s value, but the market reacted more to the Fed’s potential interest rate cut,” said the money manager. “This has given us the strength to buy dollars since yesterday, continuing to this day.”
Tonight, the market is waiting to follow the European Central Bank’s (ECB) meeting, which is expected to reduce interest rates by 0.25%, and the number of applicants for US weekly unemployment benefits, including the Producer Price Index (PPI) for August.
The money manager expects the baht range tomorrow to be at the level of 33.65-33.85 baht/dollar.
Key Market Indicators
- The yen was at 142.67 yen/dollar from 142.39 yen/dollar in the morning.
- The euro was at $1.1015/euro from the morning high of $1.1009/euro.
- The SET Index closed today at 1,421.58 points, an increase of 6.17 points (+0.44%), with a trading value of 47,509.74 million baht.
- Foreigners bought a net amount of 898.58 million baht (SET+MAY).
Government Policy and Economic Outlook
The Prime Minister announced the government’s policy to the Senedd, confirming the government’s intention and policy to create cooperation with all sectors, turning challenges into development opportunities, and creating economic and social equality for all citizens.
The urgent policies that the government must implement immediately include:
- Restructuring the entire debt system
- Supporting Thai small and medium businesses
- Reducing energy and utility prices
- Bringing the economy outside the tax system and the underground economy to the tax system
- Stimulating the Economy of the Digital Wallet Project
- Increasing the value of agricultural products and the prices of agricultural crops, raising farmers’ income levels
- Promoting tourism
- Solving drug problems
- Speeding up solutions to crime problems
- Promoting potential and providing social welfare
Economic Data and Trends
The Consumer Confidence Index for August 2024 was at 56.6, falling for the 6th consecutive month and the lowest in 13 months.
As of August 2023, consumers are still worried about Thailand’s economy, with the government’s economic stimulus policy still unclear, as well as conflict problems.
The protracted conflict in the Middle East increases the pressure on Thailand’s economic recovery.
The University of the Chamber of Commerce of Thailand assessed the impact of the flood situation in the northern region, including the latest events mostly in Chiang Rai, with the economic area expected to increase to the level of tens of billions of baht, including effects arising from missed opportunities in the tourism sector.
Global Economic News
Bank of Japan (BOJ) board member Naoki Tamura said the BOJ needs to raise the policy interest rate to at least 1% to avoid the risk of inflation that could occur and see the opportunity for Japan to reach its inflation target in the BOJ’s sustainable 2%.
A poll of economists expects the Bank of England (BoE) to keep its policy interest rate at 5.00% in the meeting next week, but interest rates are expected to be cut in November, although British inflation is likely to move above target at the BoE’s 2% level.
Tonight, important economic data will be reported, including the US number of weekly jobless claims and the consumer price index production (PPI) in August, for the European side, the European Central Bank (ECB) announced its interest rate policy decision.