Investors have turned bullish on the Thai baht for the first time in nearly a year, as Southeast Asia’s second largest economy seems poised for a recovery on the back of robust exports, easing COVID curbs and a dovish central bank.
A Reuters poll found that market participants stayed short on most emerging Asian currencies, with bearish positions on the Indonesian rupiah touching the highest in nearly two months.
Positions on the baht turned moderately bullish, after staying bearish since February 25 last year, as the tourism-reliant economy reeled under the pressure of coronavirus curbs.
The Bank of Thailand (BoT) on Wednesday left its key interest rate at a record low despite an uptick in inflation, to maintain support for a fragile economic recovery.
While the latest COVID outbreak had slowed economic activity early in the year, Thai authorities have been trying to kick-start the critical foreign tourism sector, which accounts for about 12% of gross domestic product.
Poon Panichpibool, a market strategist with Krung Thai Bank, said external factors such as an “overdone long U.S. dollar”, easing tensions surrounding Ukraine, and domestic factors such as economic recovery could be contributing to the improving bets on the baht.
He also said he expects the BoT to deliver the first rate hike in 2023, with eyes on the economic and tourism recovery. (NNT)
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