USD/THB Outlook:
The USD/THB rate is currently below its recent average and near recent lows. This suggests a bearish outlook with potential for the rate to weaken further.
Key drivers:
• Rate gap: The Federal Reserve's recent monetary policy indicates a potential for interest rate hikes, while the Bank of Thailand is actively managing the strong baht, placing pressure on the USD.
• Risk/commodities: Rising global oil prices can support the USD as a safe-haven asset, though high oil prices also put pressure on the Thai economy that relies on tourism.
• One macro factor: Reports show the Bank of Thailand intensifying currency controls due to concerns over the baht's rapid appreciation impacting exports.
Range:
The USD/THB rate is expected to drift within a relatively stable range as it tests the lower end of its recent levels.
What could change it:
• Upside risk: A significant setback in US economic data could lead to a broader dollar sell-off, boosting USD/THB.
• Downside risk: Continued strength of the baht and aggressive intervention by the Bank of Thailand could further weaken the USD against the THB.