The baht today (March 16) opened at 31.75 to the US dollar, strengthening from Friday’s close of 31.80, and would move between 31.60 to 32.00 per US dollar, SCB Securities senior market strategist Jitipol Puksamatanan said.
“The Fed has lowered interest rates by 1 percentage point to near zero, causing financial markets to fluctuate this morning,” he said. “Moreover, the Fed has announced it would buy MBS and government bonds worth $700 billion [Bt22.2 trillion] in order to solve the crisis in the market.
“We believe the lowered interest rate would gradually affect the financial market, starting from the direction of the dollar value,” he added.
The strategist also advised investors to monitor bond yields and the gold price.
“This relaxed monetary policy would contract all US bond yields and increase the gold price, as well as Asian currencies, as safe haven assets,” Jitipol explained.
He suggested investors monitor the direction of Asian stocks, as the stocks were a ‘risk-on’ asset.
“The baht is believed to keep fluctuating, since its liquidity is low,” Jitipol said. “Presently, foreign banks are the only speculators of the baht.
“The baht will fluctuate in line with other Asian currencies,” he added. “However, the lowered interest rate this time would push the Thai currency to strengthen, compared to the dollar in the long term.”