‘The baht’ depreciated again, touching 35.70 baht, keeping a close eye on COVID-19 in China.

Miss Kanchana Chokpaisarnsilp research executive Kasikorn Research Center revealed that the baht on November 29, 2022, moved at 35.70-35.72 baht per US dollar in the morning at 9:00 am, depreciating again compared to yesterday’s closing level ( November 28) at 35.58 baht per US dollar. The baht and most Asian currencies devalued.

Although the market is still waiting to closely monitor the situation in China. As for the dollar continuing to improve After senior Fed officials indicated that the Fed still needs to raise interest rates AND continue to maintain interest rates throughout the next year to fight inflation. There is also likely to be some US dollar redemption ahead of the Fed chairman’s speech tomorrow as well.

As for the movement of the baht today, it is expected to be 35.65-36.05 baht per dollar. The factors to be monitored will still be the situation in China. This will affect the direction of Asian currencies as a whole. Although important foreign economic numbers include the Consumer Confidence Index for Nov. from Europe and the United States Including the house price index for September from the United States

Mr. Poon Panichphiboon, Money Market Strategist, Capital Market Krungthai GLOBAL MARKETS Krung Thai Bank He said that the atmosphere in the US side of the stock market The S&P500 index fell more than 1.54% amid concerns about the latest cases of COVID-19 in China, which has led to protests against Zero COVID measures in many major cities. Such concerns pushed Apple’s stock price down more than 2.6% as the outbreak of COVID-19 and the protests in China could seriously affect iPhone production.

In addition, market players are also worried that the worrying situation of the outbreak of COVID-19 in China may affect the economic recovery and the demand for energy. This put pressure on energy stocks to decline (Exxon Mobil -3.0%, Chevron -2.9%).

As for European stocks, Europe’s STOXX600 index declined -0.65% as the market closed out on concerns over the outbreak of COVID-19 and the protests in China. As a result, European energy stocks were similarly lower than those in the US (Total Energy -1.2%, Equinor -1.1%) European stocks were also weighed down by comments from European Central Bank (ECB) President Christine Lagarde to continue to support the The ECB continues to raise interest rates until the ECB manages to limit high inflation.

in the currency market Hedging the financial market has encouraged market players to choose to hold the dollar as a short term safe haven asset. As a result, the dollar turned around to appreciate. compared to the base currency The dollar index (DXY) rose to 106.6 points, although the market was in a closed position. But the appreciation of the dollar has put pressure on the price of gold (the COMEX gold contract for delivery in December) falling to $1,740 an ounce. We see that the drop in gold prices is near the support zone. It can lead to a flow of gold buying transactions in the shortest time from market players. Such transaction flows can help support the depreciation of the baht.

For today, market players will wait to follow the situation of the outbreak of COVID-19 and the protests against the epidemic control measures in China. The interesting point is the government’s attitude towards the situation. which some analysts saw If protests intensify Chinese authorities may indicate a compromise. Epidemic control measures may be relaxed more or Zero COVID measures may be relaxed earlier than expected by the beginning of next year, but some market players are still to worry The epidemic situation which is still worrying and the low vaccination rate in China (mainly inactivated vaccines) lead to a greater relaxation of case control measures. As a result, the outbreak situation in China may worsen.

Regarding the trend of the baht, it is seen that the baht is clearly volatile due to the situation of the cases of COVID-19 and the protests in China, leading to the view that the pressure on the weaker side is still in the short term . If the financial market atmosphere is in a state of closure, there will be further risks. In addition, the flow of buying gold transactions at the reduced speed also contributes to the pressure on the baht to depreciate. (The baht is moving 88% in line with the direction of gold prices.)

However, the baht may not depreciate so much that it easily breaks through a resistance zone around 36.00-36.10 baht per dollar Because foreign investors have not taken profits from Thai assets as we had expected. On the other hand, the risk-off mood of the market also encouraged some foreign players to continue buying more long-term Thai bonds the previous day. (net purchase of long-term bonds + 1.5 billion baht)

Additionally, consider that market players may not be in a hurry to change their clear reserve positions. We look forward to Fed Chairman Jerome Powell’s comments on Wednesday, which we see as a factor that could lead to a clearer movement in the financial markets.