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USD/THB: US Dollar to Thai Baht Price Forecast

USD/THB: US Dollar to Thai Baht Price Forecast

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USD/THB gained over 1.00% to 36.66 on Tuesday, driving the Thai baht close to the 16-year low against the dollar of 36.95 set in July.

The US dollar surged against the Thai baht after US inflation data surprised on the upside. The dollar’s strength follows the unexpected jump in the rate of inflation in the United States. The August Consumer Price Index (CPI) data released on Tuesday came in above expectations. The Month-on-Month and Year-on-Year figures were higher than expected, sending the odds of a 100 basis point rate hike at the next FOMC meeting soaring.

Risk assets sold off sharply following the CPI, with US indices suffering their worst day since the summer of 2020. Treasury bond yields spiked higher, as did terminal rate projections, which are now predicting rates at 4.25% in 2023.

The jump in yields drove the US dollar index (DXY) higher by 1.58% — the biggest one-day move since March 2020. As a result, USD/THB had one of the best daily performances this year. Another factor driving the US dollar to Thai baht exchange rate higher is the severe flooding surrounding Thailand’s capital city. Bangkok and neighboring districts are suffering the worst flooding in recent years. As such, tourism is expected to drop off in the third quarter, heaping pressure on the Thai economy.

Dollar to Baht Prediction

Turning to the long-term monthly price chart, we see USD/THB has been trending higher since the start of last year. Notably, the rally accelerated in 2022, with the baht done over 10% against the greenback year-to-date. As a result, USD/THB made a 16-year high of 36.95 in July, and appears on track to exceed it in the near future.

If the dollar climbs above 36.95 baht, the next notable resistance is found at the 2005 high of 42.19. However, the Relative Strength Index (RSI) reads 73.84 (lower pane), suggesting the rally is starting to get stretched. With this in mind, the rate of ascent should slow going forward. Nonetheless, the general feeling amongst analysts is that the baht will continue to lose ground against the dollar.

The bullish outlook stays in place as long the pair is above the 100, and 200-month moving averages at 33.00 (blue line) and 32.80 (red), respectively.

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USD/THB Price Chart

Elliot Laybourne
Elliott is a former investment banker with a 20 year career in the city of London. During this time he held senior roles at ABN Amro, Societe Generale, Marex Financial and Natixis bank, specialising in commodity derivatives and options market-making. During this time, Elliott’s client list included Goldman Sachs, JP Morgan, Credit Suisse, Schroders Asset Management, and the Pennsylvania State Public School Employees Retirement System, amongst others. Today, he splits his time between Thailand and Dubai, from where he provides trading consultancy and business development services for family office and brokerage clientele.