Baht Slips, But Remains Within Recent Ranges, BoT On Tap Tomorrow

USD/THB has been range bound so far today, in a tight 32.70/32.79 range. We were last at the upper end of this range, around -0.15% weaker in baht terms versus yesterday's closing levels. Lows yesterday came in just under 32.60, while moves in to the 33.00/33.20 range have drawn selling interest recently. Yesterday saw offshore investors return to both local equities (+$14.4mn and bonds (+$41.3mn), but only modestly, with regional holidays likely limiting liquidity.

• The main event risk is tomorrow's BoT decision. +25bps is widely expected, see our full preview here. We are still waiting for Dec trade figures as well, which weren't released at the time of writing.
• The Thai Shippers Group stated earlier the BoT should refrain from raising rates tomorrow and take measures to stabilize the baht in the 34.00-35.00 region.
• Only 1 forecaster is expecting the BoT to hold and while no change tomorrow may evoke a knee jerk move higher in USD/THB, the follow through may not be that strong.
• Baht hasn't outperformed in recent months on BoT hawkishness relative to the Fed, but rather optimism around the tourism recovery, which looked to be gaining further momentum through the tail end of last year.
• Measures to curb baht appreciation from the central bank would arguably evoke a stronger market response.