Bank of Ayudhya sees baht peak in Q2 2020

Bank of Ayudhya sees baht peak in Q2 2020

Bank of Ayudhya projects the baht to surpass 300 to the US dollar in the first quarter of next year. (Bangkok Post photo)
Bank of Ayudhya projects the baht to surpass 300 to the US dollar in the first quarter of next year. (Bangkok Post photo)

Bank of Ayudhya (BAY) projects an upward bias for the baht until mid-2020, with the currency surpassing 30 to the US dollar in the first quarter of next year.

The baht is expected to hover around 30.75 to the dollar in the third quarter of this year before marching higher to 30.50 in the final quarter, said Roong Sanguanruang, vice-president for global market research and analysis at BAY.

The firmer baht is expected to move in a range of 29.75-31.25 during the first quarter of next year and 29.50-31 in the following quarter.

The baht could peak at 29.50 in the second quarter of 2020, Mrs Roong said.

The US-China trade brawl remains the major threat to both the economy and money markets worldwide and is pushing up the baht, she said.

The local currency is the best performer in Asia against the dollar, up about 6% this year.

Swiss-based private bank Lombard Odier recently forecast the baht to surpass the 30 mark in the second half of this year.

BAY’s head of the global markets group, Tak Bunnag, said Thailand’s solid economic fundamentals, particularly the high current account surplus of 6% of GDP and international reserve of more than US$210 billion, are attracting offshore fund inflows and lending support to the baht.

“There are only two safe-haven currencies around the world now, Japanese yen and the baht, and the baht is the only safe-haven currency among emerging markets,” Mr Tak said.

With the baht’s appreciation trend, local business operators are keen on hedging foreign exchange risk through dollar options and having higher exposure to regional currency settlement, especially in Chinese yuan, Indian rupees and Malaysian ringgit.

Larger local currency settlement also reflects higher intra-Asian trade, Mr Tak said.


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