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22 Sep 2022

Econ Digest

The Baht falls to a nearly 16-year low after the Fed raises interest rates

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        Recently, the Baht fell past THB37.40/USD to a nearly 16-year low in line with the direction of the Chinese Yuan and other Asian currencies, amid signs that the Federal Reserve (Fed) is accelerating the pace of interest rate hikes. KResearch views that the widespread weakness in all Asian currencies stems mainly from the significant appreciation of the U.S. dollar in line with the Fed’s aggressive tightening of monetary policy. The weakening of the Baht this time differs from the 1997 Tom Yum Kung crisis, which was caused by chronic problems in the domestic economy.

        For the rest of this year, KResearch assesses that the Baht will still tend to move in a volatile range. Therefore, business operators must be cautious and should select tools such as forward or options contracts to hedge foreign exchange risks. This is because financial markets still need some time to monitor the inflation and other surrounding factors in the U.S. in order to have enough information to have a clear view on U.S. interest rates, especially the end of the U.S. interest rate hike cycle. If the prospect of the Fed’s interest rate hike becomes clearer, it should help ease the depreciation pressure on the Baht and other Asian currencies.

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Econ Digest

inflationดอกเบี้ยนโยบายแนวโน้มค่าเงินบาทBaht