HKD/THB Outlook: Slightly positive, but likely to move sideways, as the rate is just below its recent average and lacks a clear driver for significant movement.
Key drivers:
• Rate gap: The Hong Kong Monetary Authority's interventions to maintain the HKD peg have resulted in lower interest rates compared to the Bank of Thailand's, which recently cut rates to stimulate growth.
• Risk/commodities: Oil prices are currently high, contributing to a stronger Thai Baht as rising global gold prices are also supporting its value.
• One macro factor: A recent increase in equity market inflows in Hong Kong has created brief demand for the HKD, though its impact may be limited due to ongoing interest rate differentials.
Range: The HKD/THB is likely to hold within its recent range, as external economic conditions balance out domestic influences.
What could change it:
• Upside risk: A strong rebound in the Hong Kong economy could boost demand for the HKD.
• Downside risk: If the Bank of Thailand's policy adjustments lead to increased capital inflows, it could further strengthen the THB against the HKD.
