The Thai baht encountered a sudden shift in momentum as the central bank announced an unexpected 25 basis points cut in its key interest rate in the afternoon on Wednesday.
This move caught many investors off guard, especially as wagers on the baht’s appreciation had recently reached their highest level since January 2023.
The decision to lower the interest rate has raised concerns about a potential short squeeze on the USD/THB currency pair, which has already seen a bounce from 32.14 to 33.67 after reaching oversold levels in September.
The impact of the rate cut suggests that there may be further challenges ahead for the Thai baht’s strength, with experts predicting a potential for a larger increase in the USD/THB exchange rate.
Analysts have set a target for a minor correction to the June-September drop, projecting the USD/THB pair to potentially reach 33.99.
These developments highlight the growing uncertainty surrounding the Thai currency and the delicate balance that the central bank must maintain to navigate the evolving economic landscape.
