The Thai baht has plummeted to its lowest level against the USD since November last year, driven by concerns of ‘stagflation’ in countries that heavily rely on energy imports. That includes Thailand.
The baht experienced its second consecutive day of declines against the USD, falling by 0.6% and reaching its lowest point since November 10, 2022. As of this afternoon, the baht is valued at 36.2 per US dollar. Experts opine that the swift depreciation was influenced by the surge in oil prices, which have risen by approximately 10% this month.
Poon Panichpibool, a market strategist at Krungthai Bank, says that the soaring oil prices have led some commodity-related players to purchase dollars.
“If oil prices continue to rise, it could further raise concerns about Thailand’s current account.”
Analysts at Maybank also expressed concerns.
“The situation in the near term looks unfavorable for the baht both domestically and externally amid fiscal concerns and the robust performance of the US economy, which is bolstering the strength of the greenback.”
Meanwhile, the Indian rupee remained close to a record low and was expected to continue facing downward pressure. Both the Indonesian rupiah and the Philippine peso also experienced a 0.1% decline ahead of interest rate decisions by Bank Indonesia and the Bangko Sentral ng Pilipinas scheduled for Thursday.
It is widely anticipated that both central banks will maintain their key interest rates unchanged for the remainder of the year, according to Reuters’ polls.
Market expectations for the US Federal Reserve’s monetary policy decision were also in focus. It is highly likely that the US Fed will keep its rates steady at the current range of 5.25% to 5.50%, with futures markets indicating a 30% probability of a quarter-point increase in November or a 40% chance of such an increase in December, as per the CME FedWatch tool.
In China, benchmark lending rates remained unchanged at the monthly fixing, aligning with expectations. This decision was influenced by signs of economic stabilization and a weakening yuan, which reduced the immediate need for monetary easing.
The yuan has declined by 5.5% so far this year.
In the stock markets, most Asian indices experienced declines. Bangkok’s shares led the losses with a 0.8% drop, while Kuala Lumpur and Shanghai saw declines of 0.2% and 0.3%, respectively. In contrast, Indonesia’s benchmark index bucked the trend, rising by 0.7% and reaching its highest level since December 2022.
SCREENSHOT: xe.com – USD to THB
