Thai baht came off from a nearly 4-month high yesterday as the currency continues to depreciate against the U.S. dollars as investors are monitoring the economic recovery in Thailand after China announced another lockdown on the city of Shanghai. Meanwhile, Thai bonds are expected to continue seeing a selloff, resulting in a fluctuating baht.
Thai baht has been performing poorly against the greenback since mid February when the currency was trading at THB32.10 to $1, but then started to depreciate, fueled by the war in Ukraine that triggered investors to seek safer assets such as government bonds, gold and dollars. Since then, Thai baht rose 5.20% to close at THB33.70 to $1 yesterday.
Bank of Thailand (BOT) is expected to maintain interest rates from a record low for more than a year in a bid to support the economy that is yet to recover from the pandemic shock. The move would follow despite soaring inflation.
The BOT was expected to keep its policy accommodative to revive growth which has yet to return to pre-pandemic levels due to a subdued tourism recovery and tighter mobility restrictions.
As for the Federal Reserve, the market is expecting a hike by 50bps at the next two meetings before shifting back to 25bps for the reminder of the year.
