HomeNewsUSD/THB: How Much Further Will the Baht Fall?
USD/THB: How Much Further Will the Baht Fall?

USD/THB: How Much Further Will the Baht Fall?

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The USD/THB pair powered to a 16-year high on Thursday as aggressive rate hike bets continue to light a fire under the US Dollar.

A general risk-off mood sent stock markets sliding and the greenback higher yesterday. Although not as pronounced as Tuesday’s rout, equities finished lower across the board following a mixed bag of US economic data.

US retail Sales were neither here nor there, with some metrics better-then-expected and some worse. Jobless claims on the other hand, came in better than expected at 213k VS the forecast 226k and the previous 218k.

Import prices and export prices were both lower on the month, effectively canceling each other out. Same with the New York Fed Manufacturing (better than forecast), and the Philadelphia Fed Manufacturing (worse).

All in all the market digested the data as bearish for risk assets, sending the greenback higher on the day. The buying accelerated towards the end of the session as equities slid further into the red.

The dollar’s strength lifted USD/THB to 36.99 and its highest daily close since 1996. The Thai currency is weaker still on Friday, changing hands at 36.97 baht to the dollar.

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US Dollar to Thai Baht Forecast

The driving force behind USD/THB’s performance is the diverging central bank policies. While the market expects the Federal Reserve Open Committee (FOMC) to raise rates at least 75 basis-points next week, a much smaller increase is expected from the Bank of Thailand (BOT) at the next meeting. Unless the BOT adopts a more aggressive stance, we expect the dollar to appreciate further against the Thai baht. Furthermore, looking the long-term price chart certainly supports this view.

The monthly chart shows USD/THB is on course to post the highest monthly closing price since 2006. In this event, we expect to see follow-through technical buying, targeting the 40.00 – 41.65 range.

However, the Relative Strength Index (RSI) of 74.87 suggests the rate of ascent is unsustainable. With this in mind, further gains are likely to be incremental. Nonetheless the long-term outlook is positive for the US dollar to Thai baht exchange rate, remaining so as long as the pair is above the 50-Month Moving Average at 36.26 (green line).

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.