AUD/THB Outlook:
Slightly positive, but likely to move sideways, as the rate is above its recent average but lacks a clear driver.
Key drivers:
• Rate gap: The Reserve Bank of Australia recently raised interest rates aimed at tackling inflation, while the Bank of Thailand has maintained a cautious approach, affecting the relative strength of the AUD against the THB.
• Risk/commodities: Oil prices are currently above their recent average, supporting the value of the Australian dollar due to its commodity currency status, while Thailand faces economic pressures from a strong baht impacting competitiveness.
• Macro factor: Reports of illicit funds flowing into Thailand have raised concerns about currency stability and could influence government interventions, adding volatility to the THB.
Range:
Expect the AUD/THB rate to hold within a relatively stable range, influenced by recent market dynamics.
What could change it:
• Upside risk: A stronger economic performance in Australia or further interest rate hikes could boost the AUD.
• Downside risk: Interventions by the Bank of Thailand to manage the baht could lead to a weaker AUD/THB exchange rate.
