The baht opened at 34.70 baht/dollar. Krungthai sees that it may gradually strengthen.

The baht opened this morning at 34.70 baht per dollar.
“Appreciate”
from the previous day's closing level of 34.78 baht per dollar.

Mr. Poon Panichphibun, money market strategist, Krungthai GLOBAL MARKETS, Krung Thai Bank Revealed that although the US stock market will be closed for the Memorial Day holiday, but market players are still taking risks. The S&P500 futures index rose further by +0.26% on news of progress in negotiations to extend the US debt ceiling. What remains to be seen is whether Congress can pass a debt ceiling agreement or not.

On the European stock market side, the STOXX600 index fell slightly -0.12%, pressured by profit-taking in tech stocks. Especially group stocks Semiconductor (ASML -0.9%) as well as stocks in the brand name product group (Hermes -0.6%). Market players may not be in a hurry to increase their investment portfolio risk. Waiting to follow the consideration of the draft agreement regarding the US debt ceiling. of congress This is expected to happen this coming Wednesday.

On the currency market side The dollar strengthened slightly. Compared to major currencies Most recently, the Dollar Index (DXY) has risen close to the level of 104.3 points. Some market players may start looking for opportunities to take profits from Long USD positions. In addition, most players are waiting for the consideration of the draft US debt ceiling agreement. by Congress this Wednesday As a result, the movement of the dollar may tend to fluctuate sideways. As for the price of gold, Although the dollar has not clearly continued to strengthen, the overall financial market atmosphere has returned to being more open to risk, putting pressure on gold prices (COMEX gold contracts for delivery in August) still unable to adjust. Can continue to rise before collapsing to the level of 1,960 dollars per ounce. We view that the contraction of gold prices may still support the gradual purchase of gold during the correction period of some players in the market. This transaction flow also helps pressure the baht to depreciate.

For today, market players will wait to assess the outlook for the US economy. Through the Consumer Confidence Index report by the Conference Board, which analysts expect Consumer confidence in May It may drop slightly to the level of 99 points, consistent with concerns about future economic trends. Including the impact of high interest rates and inflation. In addition, market players will wait for consideration of the draft US debt ceiling agreement. by congress That will take place this Wednesday.

On the Thai side The market estimates that The slowdown of trading partners' economies may cause April's exports to continue shrinking by -2.2%y/y. However, exports are likely to recover in the second half of the year. following the recovery of the Asian economy However, the trend of a slowdown in major economies such as the United States and Europe may be a factor that puts pressure on Thai exports.

For the trend of the baht value during the past night The baht has weakened to test the resistance zone around 34.80 baht per dollar. following the strengthening of the dollar Including the flow of buying gold during the period of contraction. However, the baht has begun to strengthen somewhat. After the atmosphere in the financial market began to return to being more open to risk. amid hopes that the US Congress There may be a resolution to pass the draft debt ceiling agreement within this week. (Wait for consideration this Wednesday)

We view that the momentum of the baht's depreciation has clearly begun to subside. This is reflected in the rapid reversal of appreciation of the baht. After a period of weakening near the zone of 34.90 baht per dollar on the previous day. And after that, the baht was still unable to depreciate past the resistance zone of 34.80 baht per dollar. Technically, We are beginning to see signs of RSI Divergence as well as a shooting star pattern on the daily baht chart. This may indicate that the baht has a chance to return to swinging sideways or sideway down (there is a chance of gradually appreciating). We view that there is an opportunity for such a picture to occur. It may be based on the atmosphere in the financial market that has returned to accepting risks. This will cause the selling pressure of Thai assets by foreign investors to decrease or foreign investors may return to being net buyers of Thai assets. Recently, we have begun to see selling pressure on both Thai stocks and bonds by foreign investors that has decreased somewhat from the previous period.

However, you should be careful of the fluctuations in the market gradually. Report on Thai exports and imports Because if the total export contraction is worse than expected or the trade balance is in deficit more than expected This may be a factor that pressures the baht to depreciate. In addition, we estimate that The support level of the baht may still be in the range of 34.40-34.50 baht per dollar. We see some players, such as importers, gradually buying dollars. After the baht has depreciated quickly in the past As for the resistance of the baht, it will be in the zone 34.80 baht per dollar. Some players may gradually sell short THB positions to make a profit, while the flow of selling dollars of most exporters has already gradually sold some dollars. As a result, exporters may wait to see a clear reversal of the baht's appreciation first. And during this time, some exporters may wait to gradually sell dollars. If the baht weakens near 35.00 baht per dollar (Gives the baht a chance to continue depreciating quickly if it breaks through the resistance zone of 34.80 baht per dollar that we estimated)

However, we maintain the advice that At a time when the financial market is still highly volatile due to both US political factors. (Issue of extending the debt ceiling) and Thai politics Entrepreneurs should use a variety of hedging tools, such as Options, to increase efficiency in hedging against exchange rate risk.

Looking at the baht today It is expected to be at the level of 34.55-34.80 baht/dollar.