The Thai baht is projected to weaken further this week, potentially sliding to 33.80 against the US dollar, as the greenback gains strength following a temporary easing in the US-China tariff dispute. However, analysts warn that the currency is likely to remain volatile in the near term.

Thai baht hits 19-month high against USD today

Roong Sanguanruang, senior vice-president for global markets planning at Bank of Ayudhya (Krungsri), noted that heightened global uncertainties are pressuring the baht, with the bank forecasting a trading range of 33.00 to 33.80 per dollar this week.

The US and China recently agreed to a 90-day tariff reduction, lowering US duties on Chinese goods from 145% to 30%, while China will cut its tariffs on US imports from 125% to 10%. This development initially boosted both the dollar and the yuan, but lingering uncertainties continue to fuel volatility in the baht.

Adding to the downward pressure, global gold prices have retreated to around $3,200 per ounce, further weighing on the baht, which tends to move in tandem with gold prices more than other currencies.

On Tuesday, the baht opened at 33.38 per dollar, a sharp decline from Friday’s close of 33.02, breaching the resistance level of 33.30 and testing the key threshold of 33.50, according to Krungthai Bank’s Global Markets Division.

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Poon Panitchpibun, a money market strategist at Krungthai Global Markets, attributed the baht’s weakness to the stronger dollar, which has been bolstered by improved risk sentiment following the US-China trade truce.

“The temporary agreement has eased fears of a severe US economic slowdown and reduced expectations of aggressive Federal Reserve rate cuts,” said Mr. Poon. Market participants now anticipate only two rate cuts this year, with some analysts delaying their projected timeline from July to December.

Over the past week, the Fed’s cautious stance on rate cuts, coupled with optimism over US trade negotiations and robust economic data, has contributed to the dollar’s gradual appreciation.

“Given these factors, we expect the baht to continue its downward trend, trading between 32.95 and 33.75 per dollar this week,” Mr. Poon concluded.

Thai Baht Strengthens to 4.5-Month High Against USD

Analysts advise businesses and investors to brace for continued fluctuations as global trade dynamics and monetary policy shifts keep the currency market on edge.

-Thailand News (TN)