Baht Slumps as Trump's Victory Strengthens US Dollar

[webfact]

Picture courtesy: Kasikorn Research Center

 

The Thai baht reached a two-month low on Thursday, with projections it might dip below 34.5 to the US dollar shortly. This currency pressure follows predictions that the Federal Reserve will maintain higher interest rates longer than anticipated after Donald Trump clinched victory in the recent US election.

 

According to the Kasikorn Research Center (K-Research), the baht was quoted at 34.34-36 against the dollar, dropping from the prior day's rate of 34.17.

 

A declining yuan has further weighed down the baht. This trend is mirrored in other currencies like the yen, all suffering due to the dollar's surge post-election.

 

Kanjana Chockpisansin, a lead researcher at K-Research, indicates that the baht's depreciation is partly due to anticipated capital outflows from Thailand's bond market.

 

She notes, "The US bond yield rose as Trump's anticipated economic stimulus spending might necessitate bond issuance to finance this significant expenditure."

 

The US dollar's rally is attributed to investors scaling back expectations for the Federal Reserve's interest rate cuts. Previously, markets predicted a further 1% cut by the end of next year, following a 50-basis-point slash in September.

 

K-Research projects that the Fed might trim rates by 25bps in upcoming meetings, suggesting the baht could shift to a 34.70-80 range against the dollar, should rate projections hold true.

 

KGI Securities (Thailand) senior vice-president, Rakpong Chaisuparakul, mentions potential short-term baht depreciation as investors respond to Trump's win. However, he anticipates a market refocus on US economic fundamentals, including a decelerating economy and interest rate reductions.

 

The Fed fund futures forecast predicts the central bank will reduce rates to 4.50% by end-2024, with an additional 50bps cut by 2025, concluding at 4.00%.

 

Despite these forecasts, KGI maintains a perspective of a 100bps reduction by 2025, anticipating a soft landing or slowdown in the US economy next year, according to Mr Rakpong, reported Bangkok Post.

 

-- 2024-11-08

 

 

[KhunLA]

Almost 50 satang ... I can retire now 

 

[lordgrinz]

It's got a long ways to go before anyone will notice or care, it was 37-38 at the beginning of the year.

[john donson]

BTC and gold up

[hotchilli]

Markets change by the hour... wait n see what happens in 6 months

[bkk6060]

U.S. seems to be the financial Daddy of the world.

[BritScot]

50 minutes ago, hotchilli said:

Markets change by the hour... wait n see what happens in 6 months

Yep. I predict a very strong $ and a growing American economy. The same as the last Trump government, but this time it will be stronger and faster than before as he knows who the snakes are. Just sad that stirling will crumble.  The upside maybe Thailand might devalue the baht so exports grow and tourists come. My first trip to Thailand the baht was 75 to the £.

[RichardColeman]

25 minutes ago, BritScot said:

Yep. I predict a very strong $ and a growing American economy

I certainly wish our UK had elon and what he will build in america

[hotchilli]

1 hour ago, BritScot said:

Yep. I predict a very strong $ and a growing American economy. The same as the last Trump government, but this time it will be stronger and faster than before as he knows who the snakes are. Just sad that stirling will crumble.  The upside maybe Thailand might devalue the baht so exports grow and tourists come. My first trip to Thailand the baht was 75 to the £.

Same as me, those were the years... now down to 34/45-ish.

Been here for 16 years, pension starts next year.. wait n see and what my options will be.

Stick-it-out or pastures new.. [Easterly direction] no going back

 

[Skeptic7]

Will be short-lived. Overreaction, like everything nowadays. Besides, he's anti-strong dollar. 

[MicroB]

On 11/8/2024 at 3:37 PM, BritScot said:

Yep. I predict a very strong $ and a growing American economy. The same as the last Trump government, but this time it will be stronger and faster than before as he knows who the snakes are. Just sad that stirling will crumble.  The upside maybe Thailand might devalue the baht so exports grow and tourists come. My first trip to Thailand the baht was 75 to the £.

 

 

https://www2.cepii.fr/PDF_PUB/pb/2024/pb2024-49.pdf

 

 

 

The beneficiaries will be Mexico, with wages up. The rest of the world, US included, not so well. Trump wants to devalue the US$ to make US exports more competitive. He thinks he can force countries to revalue their own currencies through tariffs. But a devalued USD will increase import costs driving up inflation. But you might say that's the idea, getting Americans to buy nice cheap American goods, not foreign goods. I work in the medical field.  I looked at US medical device makers. There are about 14,500 of them. But less than 80 actually manufacture more than 80% of their products lines at home. About 14,000 have  more than 80% of their lines manufactured wholly or partly outside of the US. Those Made-in-USA companies are generally making high value specialist equipment, that the rest of the world needs. US companies are making plenty of money, but they are not invoicing customers in USD, so devaluing the USD will reduce margins. And healthcare products are fairly price inelastic. The UK found that out post Brexit, so have the Russians, who are in a worse state because their healthcare is dependant not just on imports, but imports from foreign companies. So the cost of healthcare will go up, meaning insurance premiums go up. And Trump won't be alive long enough, for the 10-15 years needed  to essentially build a US medical device industry from scratch.

 

Our company economists are predicting staglation for the US, and concurring about a cut in global GDP. Trump's efforts to devalue the USD will be largely unsuccessful, unless he removes the independence of the Federal Reserve.