The Thai baht is showing increased volatility against the US dollar compared to its regional counterparts, primarily driven by market speculation around potential US policy rate cuts and a surge in Thailand’s gold imports. Year-to-date, the baht’s volatility rate stands at 7.3%, closely trailing the Korean won at 7.4%.
In contrast, other regional currencies exhibit lower volatility rates: the Malaysian ringgit and Indonesian rupiah are both at 5.5%, the Philippine peso at 4.7%, the Taiwanese dollar at 4.1%, the Singapore dollar at 3.7%, and the Vietnamese dong at 2.4%. According to recent data, the US Dollar Index recorded a volatility rate of 5.3%.
The baht has seen significant fluctuations since August 30, trading between 33.45 and 33.78 baht per dollar, heavily influenced by global gold price trends. On September 6, it peaked at a 19-month high of 33.49 against the dollar. This Monday, the baht opened at 33.63, marking a decline from Friday’s close of 33.52.
Market analysts predict the baht will trade within a range of 33.30-34 baht this week. Key variables to watch include the newly instituted government’s economic policies, foreign fund movements, developments in global gold prices, and upcoming US economic data.
Economic strategists indicate that the baht’s significant depreciation correlates with fluctuations in the dollar and gold prices, influenced by the latest US economic data. In August, US non-farm payrolls increased by 142,000—a figure below the expected 160,000—but improvements were noted in certain employment segments.
Consequently, this led several investors to adjust their expectations, believing the US Federal Reserve may not implement the anticipated 50 basis point cut in its policy rate, thereby bolstering the dollar’s position relative to the baht. Forecasts suggest the baht will likely fluctuate in the range of 33.40-34.10 per dollar this week.
Furthermore, ongoing analyses indicate continued volatility for the baht, primarily driven by movements in the dollar and the Fed’s policy direction, alongside the rising trend of global gold prices. The gold price has surged 21% year-to-date as of September 3, demonstrating a closer correlation with the baht’s movements compared to other regional currencies.
Thailand remains a significant player in the global gold trading arena, accounting for an average of 5% of global gold transactions over the past five years. Additionally, the country’s gold imports are notably higher than those of its regional neighbors, reflecting the strong gold investment preference among Thai investors.
