Bangkok Post
Analyst predicts baht uptick in H2
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The narrowing trade deficit and easing inflationary pressure should support the baht regaining strength against the US dollar late in the third quarter this year, reversing a short-term depreciation trend, says Siam Commercial Bank Financial Markets (SCB FM).
Key facts
- The narrowing trade deficit and easing inflationary pressure should support the baht regaining strength against the US dollar late in the third quarter this year, reversing a short-term depreciation trend, says Siam Commercial Bank
- Wachirawat Banchuen, senior financial markets strategist at SCB FM, said the baht depreciation trend is largely temporary and does not signal a prolonged weakening.
- Thailand's trade balance remains in a headwind after recording a trade deficit of around US$10 billion in May, followed by another deficit of roughly $5 billion last month, which has added pressure on the currency.
- He suggested exporters hedge around 60% of their expected foreign currency receipts through spot transactions, while using options to retain some flexibility amid continued market volatility.
- Instead, they should hedge only around 20% of their foreign currency requirements and wait for the baht to strengthen later before increasing dollar purchases, said Mr Wachirawat.
Summary
Wachirawat Banchuen, senior financial markets strategist at SCB FM, said the baht depreciation trend is largely temporary and does not signal a prolonged weakening.
The Thai currency recently weakened below 33 baht to the dollar, briefly approaching 33.5, driven by short-term factors rather than underlying economic deterioration, he said.