Goldman Sachs: A Peak In Sight, But Still A Valid Funder

Goldman Sachs note that "over the past week, the typically low-vol Thai Baht has staged an impressive rally alongside some tentative evidence that the latest surge in Thai Covid cases may be peaking. This would be consistent with the experience elsewhere (for example, the case of INR earlier in the year), where currency markets have rallied sharply once the peak in a wave of Covid cases is visible."

• "However, while that may result in some short-term strength in the Baht, especially given the short investor positioning, macro fundamentals are likely to remain challenging for some time. It is hard to envisage a substantive pickup in tourism inflows in the near future; and with very low inflationary pressures, Thailand is probably at the back of the queue in terms of hiking rates (even within Asia). So in an FX context, with better re-opening and carry prospects elsewhere, THB is likely to remain a valid funder once the optimism around peaking cases plays out."