The Thai Baht opened the market slightly weaker today at 34.20 Baht per dollar, down from the previous closing rate of 34.14 Baht per dollar. According to Mr. Poon Panitpipat, a market strategist at Krungthai GLOBAL MARKETS of Krungthai Bank, the Baht is expected to fluctuate within a range of 34.00 to 34.40 Baht per dollar over the next 24 hours. This movement is influenced by ongoing concerns regarding the trade policies of the United States, particularly as it relates to the so-called "Liberation Day" tariffs.
Since last night, the Baht (USDTHB) has shown signs of depreciation, moving in a Sideways Up pattern between 34.10 and 34.24 Baht per dollar. This trend follows the strengthening of the US dollar, which has been buoyed by market worries about the Eurozone's inflation rates. March's Consumer Price Index (CPI) for the Eurozone fell to 2.2%, while the core CPI also decreased to 2.4%. These developments have led market participants to believe that the European Central Bank (ECB) might consider further interest rate cuts, potentially 2-3 times this year.
However, the strengthening of the US dollar has been tempered by disappointing economic data from the United States. The ISM PMI for the manufacturing sector in March dropped to 49.0 points, indicating contraction as it fell below the critical 50-point threshold. Additionally, job openings in February decreased to approximately 7.57 million positions, which was worse than market expectations, further fueling concerns about the US economic outlook.
Adding to the pressures on the Baht is a decline in gold prices, which has prompted some market participants to cautiously buy gold during its dips amidst the uncertainties surrounding US trade policies. Over the next 24 hours, significant attention will be on the announcement of reciprocal tariffs by former President Donald Trump, scheduled to take place between 02:00 and 03:00 AM on April 3, 2025, Thai time.
In terms of economic data, the market is closely watching the ADP nonfarm employment data for March, which may provide insights into the nonfarm payrolls expected later this week. Other key reports include factory orders and durable goods orders data. The market is also keenly awaiting the EIA's report on crude oil inventories, which could impact short-term crude oil prices.
Looking ahead, there is a growing sense of caution regarding the Thai Baht. Analysts believe it may continue to weaken, especially after it broke through the resistance level of 34.00 Baht per dollar. The Baht faces several pressures, particularly from the potential for retaliatory tariffs that Thailand may encounter as part of US trade policy. Furthermore, concerns about the Thai economy have heightened following recent earthquakes, which have led analysts to revise their growth forecasts downward, estimating impacts between 20 to 30 billion Baht on the economy.
This situation has led to a consensus among market players that the Bank of Thailand may need to cut interest rates further in its upcoming meetings, potentially up to two times this year. Despite these challenges, there is some hope that the Baht's depreciation could be mitigated if gold prices rebound or stabilize.
While the US dollar has gained support from concerns about US trade policies, it too is expected to face volatility based on economic data releases. If US economic reports continue to disappoint, this could limit the dollar's gains or even lead to further weakening.
Market participants are also considering the potential for foreign investment in Thai bonds, which could provide some support for the Baht. However, foreign selling of Thai stocks could dampen any positive impacts from bond purchases. The Baht's movements are anticipated to remain volatile, with resistance levels projected around 34.40 to 34.50 Baht per dollar and support levels shifting to the 34.00 to 34.10 Baht per dollar range.
In summary, the Thai Baht is currently in a fragile state, influenced by various domestic and international factors. The upcoming announcements regarding US tariffs and economic data will be pivotal in determining the Baht's trajectory in the coming days. Market participants are advised to remain vigilant and consider diverse strategies for managing risk, including the use of options or local currencies to hedge against exchange rate fluctuations.
