On September 25, Ms. Kanjana Chokbaisan, research executive of Kasikorn Research Center, the baht was fixed at 35.94-35.96 baht per dollar. This morning (9:00 am), it strengthened compared to the market close of 36.01 baht per dollar at the end of the previous week. Pot is slightly stronger. But the overall picture is still a movement in a short frame. Because the domestic market’s focus is still closer to the results of Thailand’s Monetary Policy Committee (MPC) meeting in mid-week (Sept. 27).
As for the range of movement of the baht today, it is expected to be 35.85-36.08 baht per dollar. Important factors to follow include the direction of foreign capital. Currency conditions in the region and the September business confidence index are from Germany’s Ifo
Krungthai Bank’s Money Market Strategist Krungthai GLOBAL MARKETS Mr. Boon Panichpipun, the baht has been moving sideways since Friday night of the previous week (oscillating in the range of 35.90-36.03 baht per dollar) with a chance of strengthening. In addition, the baht was still supported by gold’s profit-taking run after the US PMI index report came out mixed following the dollar’s slight contraction (the services sector PMI index was worse than expected, while the manufacturing sector PMI index came in better than expected). . After the price of gold recovered close to the short-term resistance zone.
Last week, the central bank’s new dot plot reflected a tendency to keep interest rates higher for longer than expected. This week, we think it’s worth keeping an eye on statements from key central bank officials. Ready to wait for China PMI index report. On the Thai side, a key highlight was the Monetary Policy Committee (MPC) meeting.
Global Economic Perspective
▪ US side – This week may miss several important economic data reports. As a result, market players will be closely watching statements from Fed officials even after the latest dot plot reflects the Fed’s tendency to keep interest rates higher for longer. In addition, the economic data report section . Market players await the September report of the Consumer Confidence Index (Conference Board Consumer Confidence), which is likely to fall to 105.5 points in line with the pressure of a slowdown in the economy and higher interest rates. , a slowdown in the US economy will be reflected in core PCE inflation in August, which may decline to 3.9% from 4.2% in the previous month. A continued slowdown in the US core inflation rate, which we assume, could reduce the likelihood of the Fed raising interest rates again. We maintain the same view that the central bank has ended its rate hike cycle, which in contrast to the recent dot plot reflects the possibility of one more rate hike (+25bps) to the range of 5.50-5.75%.
▪ European side – The market rates the German Business Sentiment Index (Ifo Business Climate) in September. It could further decline to 85.2 points, reflecting concerns about the rising economic outlook among entrepreneurs. Energy prices continue to rise amid the impact of higher interest rates and the economies of trading partners remain sluggish. Also, analysts expect Eurozone core CPI inflation in September to fall to 4.8% from 5.3% last month, which will lead to a continued slowdown in the Eurozone economy. As for general CPI inflation, crude oil Although supported by price increases, overall it will fall to 4.5% due to the slowing trend in both economic activity and inflation. That leads us to expect that the European Central Bank (ECB) has raised interest rates to 4.00% deposit facility rate.
▪ Asian side – Most analysts still think the Japanese economy will also benefit from a recovery in domestic consumption. This is part of why the tourism industry has become so active. This picture will be reflected in retail sales in August, which will increase by +0.5%m/m. Market players will await the report of Purchasing Managers Index for manufacturing and service sectors. The market sees China’s manufacturing and services PMIs for September as signs that China’s economic activity is likely to recover. After Chinese authorities unveiled additional measures to help the economy. With the implementation of an accommodative monetary policy, the PMI index for the manufacturing and services sectors may rise to 50.2 points and 51.5 points respectively (meaning an index expansion above 50 points).
▪ Thailand side – We don’t think a “consensus” decision to raise interest rates by +25bps to 2.50% will be reached at the Monetary Policy Committee (MPC) meeting amid the possibility of higher inflation due to continued El Nino conditions, impact of crude oil prices. In addition to the recovery in consumption following the support of rising economic stimulus measures, the said interest rate hike increases the ability of monetary policy (policy space) to accommodate future risks. If the MPC sends a clear signal this interest rate hike will be the last in this rate hike cycle. We estimate that market players may gradually return to buying more Thai bonds. Decline from pressure on bond yields
In addition, Pat’s depreciation has begun to slow and may have already passed its weak point this year. Foreign investors may also be encouraged to start buying Thai bonds, according to the report on Thai exports and imports in August. The market estimates that export volume may contract by -3.4%y/y while import volume may contract by -10%y/y. Trade balance may be in deficit of more than -1.8 billion dollars. This could be a factor putting downward pressure on the baud.
As for the trend of the baht’s value, we believe that the pace of its depreciation is starting to fade. But you have to wait to see the funding from foreign investors. If market players believe that the MPC may end the cycle of interest rate hikes at this meeting, this could cause foreign investors to gradually return to buying Thai bonds. Incidentally, if China’s PMI index report at the end of the week reflects an improving trend in the Chinese economy, this could encourage the Chinese yuan and Asian currencies to strengthen. (It could go into effect as early as next week.) You should be careful and monitor the direction of crude oil prices. This, including the price of gold, may affect the course of the Baht in the short term.
As for the dollar, we think the dollar will fluctuate sideways, waiting to learn new factors. The dollar may begin to depreciate slightly. The US economic data report did not come out better than expected. However, the dollar could still be supported by reports from central bank officials. Much may still emerge that supports the central bank’s move to raise interest rates or maintain higher interest rates for longer periods of time.
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