On Monday, the Thai baht experienced a dip, with softer gold prices countering an uptick in emerging market currencies triggered by a weakened dollar.
The baht bulged up by 0.4% in early trading before retreating by 0.2% versus the dollar, mirroring the over-1% slump in bullion values and taking a hit on monthly profits by importers. Concurrently, Monday’s trading saw a slight decline in Thai stocks.
Market strategist at Krung Thai Bank, Poon Panichpibool, explained the correlation between the weakened baht and gold purchases. Whenever market participants scoop up gold on a dip, they typically convert their Thai baht into U.S. dollars to purchase gold. He added that this chain of reactions usually results in a downturn in the Thai baht, precisely what the market has witnessed this morning.
Panichpibool further noted that from the end of last week through Monday morning, the Thai baht value appreciated a bit below the 34.5-mark, prompting importers’ buying interest, which could further result in some profit-taking position.
