USD/THB Sits Near Cyclical Highs Ahead Of BoT Policy Review

Spot USD/THB trades +0.010 at THB37.885 after a sharp upswing Monday, as participants await Wednesday's monetary policy decision from the BoT. Topside technical focus is on Sep 19, 2006 high of THB37.951, while bears keep an eye on the 50-DMA at THB36.396.

• Foreign investors sold a net $50.58mn in Thai equities Monday as offshore demand for local stocks has dwindled over the past few weeks. The SET index was down ~0.6% come the closing bell.
• Thailand's trade deficit unexpectedly deepened in August, data from the Customs Department showed. It widened to $4.215bn from $3.660bn prior versus BBG median estimate of $3.044bn. The trade gap was largest since Apr 2013 as Thailand "had to import large amounts of oil and natural gas at high prices," Commerce Min Jurin said.
• Weak external trade position in one of the reasons behind baht vulnerability, with the currency underperforming all its peers from emerging Asia save for the South Korean won. Lingering political uncertainty amid PM Prayuth's pending term-limit case and the BoT's status as one of the last regional central banks to join the global tightening campaign provide further headwinds to the baht.
• The BoT will announce the outcome of its monetary policy review tomorrow and 18/22 economists surveyed by BBG expect a 25bp rate rise. The rest look for a 50bp hike, which could lend some support to the struggling baht.
• Meanwhile, FinMin Arkhom said he was not concerned about baht depreciation as the BoT is monitoring the FX market.