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Baht Rallies On Broader USD Weakness, BoT Wants To Keep Policy Optionality

THB
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USD/THB is back to the 36.85/90 region, around 0.50% stronger in baht terms. Earlier lows were at 36.83. Highs from early yesterday came in at near 37.10. This was fresh highs in the pair back to early October last year.

  • Continued USD softness has aided the baht, although USD/THB is still some distance from a downside test of the 20-day EMA, near 36.60. We haven't sustained a move sub this support level since the first half of March.
  • The baht remains comfortably the worst EM Asia FX performer YTD (off -7.45%). We have been more mid-range in April to date, down 1.40%.
  • BoT minute headlines have crossed from the last policy meeting. The central bank voted in favor of keeping rates steady by 5-2 at the Apr.
  • It appears the central bank wants to keep optionality (for broader risks and the baht outlook) around the policy outlook given considerable uncertainties facing the outlook, both in terms of when stronger fiscal spending might impact the economy and the global backdrop. PM Srettha continues to call for lower rates (see this link).
  • The cross asset space, the SET is higher, but only marginally above recent cyclical lows. Offshore portfolio flows are a touch positive for equities so far this month (+$52.6mn), but negative for bonds (-$765.2mn).
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USD/THB is back to the 36.85/90 region, around 0.50% stronger in baht terms. Earlier lows were at 36.83. Highs from early yesterday came in at near 37.10. This was fresh highs in the pair back to early October last year.

  • Continued USD softness has aided the baht, although USD/THB is still some distance from a downside test of the 20-day EMA, near 36.60. We haven't sustained a move sub this support level since the first half of March.
  • The baht remains comfortably the worst EM Asia FX performer YTD (off -7.45%). We have been more mid-range in April to date, down 1.40%.
  • BoT minute headlines have crossed from the last policy meeting. The central bank voted in favor of keeping rates steady by 5-2 at the Apr.
  • It appears the central bank wants to keep optionality (for broader risks and the baht outlook) around the policy outlook given considerable uncertainties facing the outlook, both in terms of when stronger fiscal spending might impact the economy and the global backdrop. PM Srettha continues to call for lower rates (see this link).
  • The cross asset space, the SET is higher, but only marginally above recent cyclical lows. Offshore portfolio flows are a touch positive for equities so far this month (+$52.6mn), but negative for bonds (-$765.2mn).