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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

 

 

[nauseus]

 

 

How are rate cuts supposed to support the dollar? Why does K Bank reckon that Trump will spend more than the Dems?

 

Hopeless analysis. 

[daveAustin]

Let’s hope he wins then. We could all do with that extra 0.66 😂

Baht is still WAAAAYY overpriced. The real value (yes it is propped up—look who’s moving monies around) is somewhere around 40. 

[chiang mai]

24 minutes ago, nauseus said:

 

 

How are rate cuts supposed to support the dollar? Why does K Bank reckon that Trump will spend more than the Dems?

 

Hopeless analysis. 

Keeping rates high when inflation is low, constraints economic growth. USD will only benefit from high rates if inflation remains high.

[Ben Zioner]

Funny that, I thought that the vote of the undereducated, obese, pink expats in Thailand had been secured a long time ago. Therefore this headline is a waste of space.

[G_Money]

Look up in sky!  Is it a bird?  No!

 

Is it a plane?  No!

 

The sky is falling!  Again.

 

If a baht or two determines your financial well being in Thailand, one has bigger issues.

[mdr224]

Are these analysts thai people? Their record of predicting stuff isnt too good ive noticed

Edited 1 hour ago by mdr224

[TheAppletons]

1 hour ago, nauseus said:

 

 

How are rate cuts supposed to support the dollar? Why does K Bank reckon that Trump will spend more than the Dems?

 

Hopeless analysis. 

 

  Without attempting to get into the politics of the US election:

 

  1.  The article states the US Federal Reserve will "gradually" cut rates.  In other words, the previously expected tranche of consecutive rate cuts may not materialize.  This doesn't necessarily "support" the dollar but it slows the weakening of the dollar that would occur if the Fed continued on their previously expected course of action.

 

  2.  When looking at what candidate Trump has proposed, it's not the spending side of the equation that's of "concern" to some, it's more the revenue side.  He has proposed eliminating taxes on tips, overtime pay, and Social Security payments.  That means less revenue, so even flat spending results in a greater deficit, if those things were to happen. He would also like to continue with the tax cuts he achieved during his Presidency, which are set to expire in 2025.  That would also reduce incoming revenue.  Add to that his tariff proposals (generally inflationary in economic theory) and we're back to higher interest rates for longer.  

 

  (Disclaimer: I am not voting for either candidate and this post is in no way intended to reflect a preference or dislike for either of the US presidential election candidates.)