After Donald Trump's victory in the US presidential elections, experts expect a decline in the Thai baht.
See: The Thai baht could fall if Donald Trump wins
The market expects a slower than expected reduction in interest rates from the Federal Reserve after Donald Trump's victory, the Kasikorn Bank Research Center (K-Research) said.
The baht was quoted at 34.34-36 to the greenback on Thursday, November 7, down from Wednesday's close of 34.17, which was dragged down by the yuan's continued decline.
But, this Friday at 7:20 a.m. (Thailand time), 1 US dollar is worth 34.04 baht and one euro is worth 36.71 baht.
See: Thai Baht THB price
Kanjana Chockpisansin, Head of Research, Banking and Finance at K-Research Group, said on Thursday:
“The baht has depreciated and there are signs that funds will continue to flow out of the Thai bond market.
U.S. bond yields have risen as Trump is expected to spend heavily to stimulate the economy, and the new administration may have to issue bonds to finance massive spending. »
The dollar rose as investors bought the U.S. currency after lowering the Fed's interest rate cut forecasts.
The market previously expected the US central bank to cut its key rate by another percentage point by the end of next year, following a 50 basis point (bps) cut in September.
“We expect the Fed to cut the rate by another 25 basis points at its meeting this week and to clearly state after the meeting that further cuts will depend on economic conditions.
If this is the case, it is possible that the baht could slide towards a range of 34.70-80 per dollar,” Ms Kanjana said.
Rakpong Chaisuparakul, Senior Vice President of KGI Securities (Thailand), said:
“Short-term depreciation is possible when trading with Trump begins.
But once the enthusiasm over Trump's victory fades, markets could return to U.S. fundamentals, focusing on the slowing economy and further interest rate cuts. »
Fed funds futures now forecast the central bank will cut the policy rate to 4.50% by the end of 2024, with cuts of just 50 basis points in 2025 to complete the cycle at 4, 00%.
However, KGI economists maintained their baseline view for a 100 basis point reduction in 2025 as the United States is expected to enter a cyclical slowdown or soft landing phase next year, a Mr Rakpong said.
See also:
Thailand prepares strategies to prosper in the Trump era
US elections: Thailand will lose as much with Trump as Harris
Source : Bangkok Post
