BANGKOK, Thailand – Head of the TISCO Economic and Strategy Unit (TISCO ESU), Komsorn Prakobpol, said the Thai baht, which has appreciated rapidly from nearly 37 baht per US dollar in late June to around 34 baht per US dollar, may weaken in the remaining months of this year. Thai currency could depreciate to approximately 34.50 baht per US dollar by year-end. This anticipated change is influenced by two main factors:
- Federal Reserve’s Interest Rate Cuts: The market anticipates that the Federal Reserve (Fed) may reduce interest rates by up to 1% in 2024. However, TISCO ESU believes that the likelihood of a substantial cut, such as 50 basis points (bps) at any given meeting, is low. This is because the US economy remains robust, and the Fed might only lower rates by 25 bps per meeting. Such a move could lead to a strengthening of the US dollar, putting pressure on the baht.
- Donald Trump’s Policy Impact: Should Donald Trump be re-elected as President, his policies are likely to strengthen the US dollar, including:
-Increasing import tariffs on goods from China and other countries, which could raise prices and inflation rates.
-Deporting illegal immigrants, potentially driving up wages and production costs domestically.
-Reducing corporate and personal income taxes, leading to higher budget deficits and increased issuance of government bonds.
Investors should closely monitor the Fed’s meeting on September 18 and the US presidential debate on September 10 to gauge the direction of the baht for the remainder of 2024.
