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W/C July 25, 2022

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Post-Fed Reprieve Evaporates

THB
BulletEM BulletEmerging Markets

Spot USD/THB has quickly clawed back the bulk of its opening losses, with the baht underperforming all of its regional peers, as participants assess Thailand's interest-rate outlook in the wake of the Fed's rate decision.

  • The pair last trades -0.055 at THB34.980 and renewed losses past Jun 10 low of THB34.528 & Jun 6 low of THB34.300 would expose May 30 low/May 5 low/round figure of THB34.048/34.018/34.000. Bulls need a break above Jun 15 high of THB35.135 before taking aim at Mar 10, 2017 high of THB35.425.
  • Thailand's Housing Finance Association warned that rising inflation and impending rate hikes will reduce demand for properties and mortgages. Meanwhile, the Real Estate Information Centre predicted that the Bank of Thailand will hike its policy rate twice, by 25bp each time, in the second half of the year.
  • This comes as a growing divergence is unfolding between the BoT and the government on the preferred monetary policy trajectory. While BoT God Sethaput signalled intention to tighten policy swiftly, top government officials including PM Prayuth, FinMin Arkhom and Dep PM Supattanapong have recently called upon the central bank to keep rates low.
  • Reminder that the BoT said Wednesday that it stands ready to "take care" of excessive THB volatility if needed.
  • PM Prayuth will speak on a couple of occasions today, while the University of Thai Chamber of Commerce will hold a briefing on its 2022 economic projections.
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Spot USD/THB has quickly clawed back the bulk of its opening losses, with the baht underperforming all of its regional peers, as participants assess Thailand's interest-rate outlook in the wake of the Fed's rate decision.

  • The pair last trades -0.055 at THB34.980 and renewed losses past Jun 10 low of THB34.528 & Jun 6 low of THB34.300 would expose May 30 low/May 5 low/round figure of THB34.048/34.018/34.000. Bulls need a break above Jun 15 high of THB35.135 before taking aim at Mar 10, 2017 high of THB35.425.
  • Thailand's Housing Finance Association warned that rising inflation and impending rate hikes will reduce demand for properties and mortgages. Meanwhile, the Real Estate Information Centre predicted that the Bank of Thailand will hike its policy rate twice, by 25bp each time, in the second half of the year.
  • This comes as a growing divergence is unfolding between the BoT and the government on the preferred monetary policy trajectory. While BoT God Sethaput signalled intention to tighten policy swiftly, top government officials including PM Prayuth, FinMin Arkhom and Dep PM Supattanapong have recently called upon the central bank to keep rates low.
  • Reminder that the BoT said Wednesday that it stands ready to "take care" of excessive THB volatility if needed.
  • PM Prayuth will speak on a couple of occasions today, while the University of Thai Chamber of Commerce will hold a briefing on its 2022 economic projections.