Dealers see baht stabilising

BANGKOK: -- The baht is likely to stabilise at a range of 40.50 to 41.50 to the US dollar over the short term, barring any major fundamental shifts in the market, according to local dealers.

Sooksant Wattanayakorn, a dealer at Kasikornbank, said the baht was expected to remain weak for now as market sentiment was taking a more bullish view of the US economy when compared with European economic trends.

Stronger US economic figures when compared with those of European economies could help boost the dollar and thus put downward pressure on the Thai baht and other Asian currencies.

``Right now, the fundamentals of the baht is quite sensitive to oil prices. If oil prices continue to rise, economic growth may slow, impacting the baht,'' Mr Sooksant said.

Based on current economic fundamentals, Mr Sooksant said 41 was ``fair value'' for the baht.

``Short-term, we may see sideways trading and even the unit hitting 42 to the dollar at certain points. But I don't believe that we will see greater weakness than that.''

The baht, which traded at 39.50 earlier this year, has fallen steadily in recent months in part to a stronger US economy and also a slowdown in Thai growth. The widening trade and current account deficits, due to soaring oil prices, has also placed downward pressure on the baht.

The baht yesterday traded at 41.05 to the US dollar, compared with 41.16/18 on Wednesday.

Mr Sooksant said that while high oil prices were negative for the Thai economy, a weaker baht would help exports and the economy overall.

``[The weakening baht] is linked to capital flows and trade. A trade deficit means higher demand for US dollars, which is the main factor for the weaker baht,'' he said.

``Fortunately, in the first half, there have been no signs of capital outflows.''

--Bangkok Post 2005-06-24

Dealers see baht stabilising

``Right now, the fundamentals of the baht is quite sensitive to oil prices. If oil prices continue to rise, economic growth may slow, impacting the baht,'' Mr Sooksant said.

--Bangkok Post 2005-06-24

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with current oil prices, unlikely .