Baht Finished Asia Session As Worst Regional Performer

Spot USD/THB ticked higher into the London morning as the Bank of Thailand warned of continued baht volatility and unveiled plans to further ease FX rules. Earlier in the day, data from the Thai Customs Office revealed that trade deficit unexpectedly widened in May.

• The BoT said it would promote the use of local currency among local businesses and encourage them to reduce their reliance on the USD. It will also relax FX rules for local companies and individuals to help them with risk management, with new rules expected to take effect from 3Q2023.
• The baht remains exposed to gyrations in political risk as it remains uncertain whether the Move Forward Party and its allies will be able to form government, after they defeated parties affiliated with the country's royalist-military elite in last month's general election.
• Spot USD/THB closed +0.077 at THB35.275, close to a new cyclical high printed at THB35.295. This allows the pair to consolidate above its 200-DMA, which gave way two days ago for the first time since Nov 30, 2022.