The baht opened at 34.57 baht/dollar, “appreciating slightly”, keeping an eye on the impact of SVB-US inflation.

The baht opened this morning at 34.57 baht per dollar.
“Slightly strengthened”
from the previous day's closing level of 34.60 baht per dollar.

Mr. Poon Panichphibun, money market strategist, Krungthai GLOBAL MARKETS, Krung Thai Bank Revealed that the US stock market Movement fluctuates heavily Market players still do not dare to take risks and continue to sell stocks in US banking groups such as Citi -7.5%, Well Fargo -7.1%, Bank of America -5.8% amid concerns about the stability of the US banking system. After the shutdown of Silicon Valley Bank, although the US authorities and the Fed will issue measures to assist with liquidity.

However, such concerns over the US banking system have caused market players to begin evaluating whether The Fed may not be able to raise interest rates at this March meeting (from the CME FedWatch Tool, the market gives a chance of up to 35%) and the interest rate increase may reach a maximum of no more than 5.00%. This picture has supported the tech stocks. and Growth style stocks rose (Microsoft +2.1%, Amazon +1.9%, Apple +1.3%), causing the Nasdaq tech stock index to rise by around +0.45%, while the S&P500 closed the market at -0.15%.

On the European stock market side, the STOXX600 index fell more than -2.42% amid concerns about liquidity problems in the US banking system. It could happen to European banks as well. As a result, market players chose to sell stocks in the banking sector (UBS -7.7%, Intesa Sanpaolo -6.1%, Santander -5.7%) to reduce risk to their investment portfolios. In addition, the trend of interest rate increases The policy of the European Central Bank (ECB) this week has caused market players to not dare to return to holding tech stocks or growth style stocks (Kering -4.1%, ASML -2.2%, Adyen -1.7%).

As for the bond market Risk exposure of the US financial market And the adjustment of market players' views towards the Fed's interest rate increase has put pressure on the US 10-year bond yield to continue to decline until it almost touched the level of 3.40% before rising to the level of 3.56%. This movement of the US 10-year bond yield reflects the increased volatility in the bond market. We maintain our previous recommendation that Market players should wait to gradually buy bonds when bond yields are rising. and may sell for profit at a time when bond yields decrease. Rather than chasing the purchase price This is because the Fed's policy interest rate hike has not yet ended or the direction of policy interest rates is still uncertain.

On the currency market side The overall dollar continued to weaken against major currencies. Even though the market is in a state of being closed to risk. But market players choose to hold gold or the Japanese yen (JPY) as safe-haven assets rather than the dollar. Especially at a time when market players are starting to predict that The Fed may not raise interest rates in the upcoming meeting, causing the Dollar Index (DXY) to recently drop near the level of 103.7 points. However, we expect the dollar to fluctuate sideways and have a chance of high volatility as the market gradually receives rate information. US CPI inflation today

As for the gold price side The shrinking of the dollar and the US 10-year bond yield amidst the risk-taking of the US stock market has caused the price of gold (COMEX gold contract for delivery in April) to surge through the resistance zone that we have. Estimated to the level of 1,917 dollars per ounce. which we consider There may be some players gradually selling to make some profit from the rebound of the gold price. And such transaction flows may help slow down the baht's depreciation.

Today, market players will be waiting for the February US CPI inflation data report. which will be gradually acknowledged at 19.30:0.4 p.m. Thailand time The analysts expected that The momentum of headline CPI inflation and core CPI inflation remained at +6.0%m/m, or +5.5%y/y and +0.50%y/y, respectively. We estimate that If the CPI inflation report is as expected or less than expected, And considering the problems in the US banking system caused by the shutdown of SVB Bank, there is no need for the Fed to increase interest rates by +XNUMX%.

But we estimate that If there is a problem in the US banking system It's not very worrying. The Fed may continue to raise interest rates until reaching 5.50% to successfully control the inflation problem. And in the case that CPI inflation accelerates higher than expected, such as +0.5%m/m, we estimate that The Fed may choose to gradually raise interest rates at +0.25% increments as before, rather than accelerating rate increases. Until the Fed is confident that there are problems in the US banking system That's not very worrying. This may take time to assess and monitor the situation. And if inflation has not slowed down, we expect the Fed to be able to tighten monetary policy at its next meeting after assessing risks in the banking system.

Moreover, market players will be watching for the impact that the shutdown of Silicon Valley Bank (SVB) will have on the US banking system. and banking systems in other regions or not? After the recent US government and the Fed has issued liquidity assistance measures which we estimate It may help reduce the risk of a bank run and will help prevent problems from spreading to the point of causing the US banking system. There can be serious problems.

For the trend of the baht value We evaluate that The appreciation of the baht last night This was partly due to a slight decline in the dollar and the flow of gold profit-taking transactions.

Incidentally, we view that today the value of the baht (including almost every asset) is at risk of severe fluctuations. Especially during the period Market players gradually received the US CPI inflation data report today. In addition, there are concerns about the stability of the US banking system. This has recently created concern for the banking system in many regions. It may cause market players to Especially foreign investors still do not dare to take risks. And there is an opportunity to see additional selling pressure on Thai stocks. In addition, the downward adjustment of bond yields around the world. It may cause foreign investors to gradually sell Thai bonds as well.

which we estimate during the day Before the market receives the US CPI inflation report, the baht may fluctuate sideways in the range of 34.45-34.75 baht per dollar. There will be some depreciation, but we think that the baht will not depreciate heavily. Because there is still support from the flow of gold profit-selling transactions. After the price of gold rose through the resistance zone of 1,900 dollars per ounce.

During this period, we view that financial market volatility remains high. (The value of the baht fluctuates at the level of 9%-10% per year, which is much higher than the average of the past 10 years at 5%.) It makes us think that Entrepreneurs should use a variety of financial tools, such as Options, to increase efficiency in protecting against exchange rate risk.

Looking at the baht today Expected to be at the level of 34.45-34.75 baht/dollar (before acknowledging the US CPI inflation report)