Blast from the Past - 60's, 70's, 80's,90's Music (2024)

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Thailand's baht is expected to depreciate further amid continuing capital outflows leading up to the US presidential election next month. Kasikorn Research Centre (K-Research) forecasts that if Republican candidate Donald Trump secures victory, the baht could potentially trade below 34.50 against the dollar.

 

The baht recently fell to 33.84 against the dollar, marking its lowest level in over six weeks. This comes as other regional currencies also weakened, impacted by stronger US dollar performance.

 

Kanjana Chockpisansin, K-Research's head of research for banking and financial sectors, explained that outflows from Thailand's stock and bond markets are occurring, bolstered by the dollar's strength due to rising US bond yields. The US Federal Reserve has indicated a gradual interest rate cut, further supporting the dollar.

 

On Wednesday, US 10-year Treasury yields peaked at 4.26%, the highest since late July, fueled by concerns over bond market pressures linked to a contentious November election.

 

"If Mr. Trump wins, the potential increase in government spending or borrowing could complicate US inflation reduction efforts, impacting the Fed's rate cut path," noted Kanjana. Such dynamics bolster the dollar, affecting Asian currencies like the yuan.

 

Despite these factors, K-Research continues to foresee a 0.25% reduction in US rates at each remaining Fed meeting this year, in line with Kasikorn Bank's stance.

 

Meanwhile, Thailand's Monetary Policy Committee (MPC) is likely to hold domestic policy rates at its December meeting following a recent 25-basis-point reduction. "The MPC decisions are more likely to reflect Thailand’s own economic conditions rather than mirroring Fed actions," Kanjana added.

 

Kavee Chukitkasem from Pi Securities observed ongoing fund withdrawals from the Stock Exchange of Thailand (SET) amid election uncertainties and institutional investors viewing the SET's current price-to-earnings ratio as expensive, reported Bangkok Post.

 

"Election uncertainties are steering investors away from riskier assets toward safer holdings like the dollar and gold. Nonetheless, historically, stocks tend to recover post-election, regardless of the outcome," Kavee concluded.

 

-- 2024-10-26