HKD/THB Outlook:
Bearish, as the rate is below the 90-day average and close to recent lows, facing downward pressure.
Key drivers:
• Rate gap: The Hong Kong Monetary Authority's (HKMA) interventions help to support the HKD, but the stronger Thai Baht faces little current challenge from the Bank of Thailand.
• Risk/commodities: With oil prices significantly above their average, the Thai economy benefits, boosting the Baht, while higher oil costs constrain Hong Kong's economic outlook.
• One macro factor: Concerns over Thailand's strong Baht affecting exports have led the Bank of Thailand to intervene, potentially stabilizing or weakening the THB further.
Range:
The HKD/THB is expected to drift within its recent range, as it is testing lower levels.
What could change it:
• Upside risk: A significant increase in demand for HKD from mainland investors could strengthen the currency.
• Downside risk: Continued pressures on the global economy or further regulations affecting Thailand could lead to a stronger Baht.