BANGKOK, Thailand – As of November 4, the Thai baht opened stronger at 33.87 baht per US dollar, benefiting from the depreciation of the dollar and rising gold prices. According to Krung Thai Bank, while the baht has gained slightly, it remains susceptible to high volatility as investors await the results of the US elections and monitor the direction of the Chinese yuan and foreign fund flows. Trading range for the baht is expected to be between 33.75 and 33.95 baht per dollar.
Poon Panitphiboon, a market strategist at Krung Thai Global Markets, stated that the baht has opened the day at 33.87 baht per dollar, a minor increase from last week’s closing level of 33.90 baht. The baht has seen fluctuations recently, moving within a range of 33.78 to 33.99 baht per dollar. Its appreciation was attributed to the weakening of the dollar and rising gold prices, following the release of non-farm payroll data which indicated an increase of only 12,000 jobs—significantly lower than the expected 100,000.
However, the baht briefly weakened again, approaching 34.00 baht per dollar, as market participants evaluated the potential impacts of the recent hurricanes and a Boeing strike on US employment data. On Monday morning, the baht started to appreciate again, following the dollar’s depreciation as traders reduced the likelihood of Donald Trump winning the US elections, particularly noted in betting markets which currently give him a 54.6% chance of victory.
Looking ahead, the baht faces high volatility influenced by the US election results. If gold prices continue to rise, this could provide some support for the baht. Additionally, movements in the Chinese yuan and foreign investment flows will also impact the baht’s direction.
Regarding the dollar’s future, it is anticipated to fluctuate based on the US election outcome. If Trump wins, the dollar may strengthen; conversely, it could weaken significantly if Kamala Harris emerges victorious. The dollar’s movement will also reflect market sentiment regarding the monetary policy outlook of major central banks, with attention on upcoming meetings of the Bank of England (BOE) and the Federal Open Market Committee (FOMC) of the Federal Reserve.
Market participants are advised to utilize various tools to hedge against exchange rate risks amidst the increasing volatility of the baht and other currencies. Options or local currency contracts, alongside forward contracts, may be viable strategies. Last week, while the dollar traded within a stable range, the baht weakened due to foreign selling of Thai assets and a downturn in gold prices.
This week, vigilance is advised as the market reacts to the US election results, the FOMC meeting, and earnings reports from publicly listed companies.
