The Thai Baht Depreciates Below 36 to the Dollar Amid Inflation Concerns
The value of the Thai baht has rapidly depreciated, falling below 36 baht to the US dollar. This decline is driven by various factors, including soaring crude oil prices and the risk of a credit rating downgrade for Thailand due to government policies leading to increased debt. This situation has put brokers at risk of exerting pressure on fund flows. However, despite these challenges, experts believe that the Thai stock index will not plummet below the critical threshold of 1,500 points.
Influence of Current Factors on the Baht
Today, the market witnessed a weak opening, with the baht breaking through the 36 mark due to cash outflows. The expectation is that the Federal Reserve (Fed) will maintain interest rates at their current level for an extended period, further impacting the baht’s performance. Additionally, gold prices have surged by an additional 150 baht this morning. Investors are awaiting the outcomes of the Fed’s decision, which remains a major factor influencing the market.
Anticipation Surrounding the Fed Meeting
Analysts at Asia Plus Securities Company have highlighted that investors are closely monitoring the upcoming meeting of the United States Federal Reserve (known as the Fed). Market expectations indicate that the Fed will maintain interest rates at 5.5%. As a result, today’s trading in the Thai stock market (SET) may experience a downturn. Nonetheless, experts anticipate a potential market rebound and rediscovered direction following the conclusion of the meeting.
Historical data reveals that stock markets tend to exhibit fluctuations prior to Fed announcements. However, the markets generally recover post-meeting, even if the Fed decides to raise interest rates.
The Baht’s Devaluation Against the US Dollar
Simultaneously, the Thai baht has reached its highest point in ten months, surpassing 36 baht per US dollar. This rapid depreciation can be attributed to mounting inflationary pressures and the ongoing surge in crude oil prices.
Additionally, there is a looming risk of Fitch Ratings downgrading Thailand’s credit rating. If the government’s new policies significantly weaken Thailand’s fiscal position, there is a possibility of increased national debt, a slowing influx of foreign capital, and a subsequent weakening of the baht’s value.
Nevertheless, despite these challenges, the research department suggests that fluctuations in the Thai Stock Index (SET Index) may lean towards a downward trajectory, but are unlikely to dip below 1,500 points. Today’s projected trading range is set at 1,515 – 1,530 points.
Foreign investors have also been active in the Thai market, with net sales of Thai stocks reaching 151,225 million baht between September 1, 2023, and September 20, 2023.
Thailand’s Prime Minister Focuses on Sustainable Development Goals
Prime Minister Settha Thavisin recently traveled to the United States to present a statement at the Leaders’ Meeting on the Sustainable Development Goals (SDG) Summit 2023. In his statement, he emphasized the importance of poverty reduction, human rights, and the promotion of clean and modern energy solutions.
During his visit, the Prime Minister also met with the CEO of BlackRock Group, a prominent investment management company in the United States. The purpose of the meeting was to explore investment opportunities in Thailand, particularly in businesses involved in clean and environmentally friendly energy. This collaboration aims to expand investment and production bases in Thailand.
BlackRock has shown keen interest in investing in Sustainability Linked Bonds (SLBs) – a novel type of green debt instrument. Furthermore, it is expected that the Thai government will strive to promote 67 such bonds in the coming year.
The Asia Plus Research Department believes that this development will likely generate positive sentiment among investors towards Clean Energy shares, including start-up businesses. Moreover, companies that have previously issued Environmental, Social, and Governance (ESG) Bonds or SLBs are expected to attract increased attention from both domestic and foreign investors.
The Thai baht quickly depreciated past 36 baht to the dollar. of inflation concerns After crude oil prices skyrocketed Including Thailand which is at risk of having its credit rating downgraded from government policies that could lead to an increase in debt. Brokers are at risk of putting pressure on fund flows I believe the Thai stock index will not fall below 1,500 points.
Today’s baht value The market opened weak, breaking through 36 due to cash outflows. Expect the Fed to hold interest rates for a long time.
Today’s gold price is pushing another 150 baht this morning. Waiting for the Fed results is still an important factor.
Asia Plus Securities Company Indicated in the analysis tonight, September 20, 2023, investors are waiting for the meeting of the United States Federal Reserve or the Fed (Fed), with the market expecting to maintain interest rates at 5.5%, causing the Thai stock market (SET) to be depressed. today, but there will be an opportunity to see the direction regenerated after the meeting
This is reflected in past statistics: The Fed announces interest rates as the market expects at each meeting. Mainly, the stock market will fluctuate before the meeting. But after the meeting, it usually recovers, even if the Fed raises interest rates.
The movement of the baht against the dollar
Meanwhile, the value of the baht was more than 36 baht per US dollar. Reached the highest point in 10 months and is considered a rapid depreciation. This is due to pressure on inflation which could increase. After the price of crude oil continues to rise
There is also a risk that Thailand’s credit rating will be downgraded by Fitch Ratings. If Thailand’s fiscal position is greatly weakened as a result of the government’s new policy, it is possible that debt will increase. It is considered a risk that the flow of foreign capital will slow down. and the value of the baht may weaken
However, from the above issues The research department estimates that it should cause the Thai Stock Index (SET Index) to fluctuate in a downward direction, but the downside is not less than 1,500 points, looking at today’s range set at 1,515 – 1,530 points.
From the beginning of 1 September 2023 until 20 September 2023, foreign investors sold Thai stocks worth a total of 16,027 million baht, resulting in total net sales for 2023 at 151,225 million baht.
Mr Settha Thavisin, Prime Minister, traveled to the United States to present a statement at the Leaders’ Meeting on the Sustainable Development Goals (SDG) Summit 2023, which emphasized reducing poverty and giving importance to human rights including promoting modern energy
Meanwhile, the Prime Minister met with the CEO of BlackRock Group, a huge investment management company in the United States, to study ways to invest in Thailand. Especially supporting businesses involved in Clean Energy or environmentally friendly energy. to expand the investment and production base in Thailand
BlackRock has expressed interest in investing in an SLB (Sustainability Linked Bond), a new type of debt instrument in the green debt instruments group. that the Thai government will push 67 next year
The Asia Plus Research Department considers the issue likely to be good sentiment for Clean Energy shares, including start-up businesses. and has issued ESG Bonds or SLBs in the past This is likely to get more attention from Thai and foreign investors.
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