The value of the baht weakened past 36.50 baht/dollar. Krung Thai expects it may reach 37 baht/dollar.

Mr. Poon Panichpibul, Money and Capital Strategy Officer at Krungthai GLOBAL MARKETS, Krungthai Bank , revealed that the Thai baht weakened overnight (fluctuating between 36.52-36.76 baht per dollar) following the strengthening of the US dollar . This strengthening is supported by concerns that the Federal Reserve may maintain high interest rates for an extended period, and the demand for the dollar as a safe-haven asset during volatile market conditions.

At the same time, the rise of both the dollar and the US 10-year bond yield has put pressure on gold prices to fall heavily. which we expected Transaction flow for buying gold during the correction period This is another factor that pressures the baht to depreciate as well.

US stock market participants remain hesitant to take on risk following the sharp rise in crude oil prices (due to a report showing a larger-than-expected decrease in US crude oil inventories). Concerns remain that the Federal Reserve may keep interest rates high for longer than anticipated ("Higher for Longer") to control inflation, which could be fueled by the rising crude oil prices. Overall, the S&P 500 closed up 0.02%.

On the European stock market side, the Stoxx 600 index continued to decline by -0.18%, pressured by selling in stocks sensitive to interest rate and bond yield trends, such as utilities, amid concerns that major central banks may keep interest rates high for an extended period to control inflation. However, European stock markets received some support from gains in the energy sector (BP +1.4%) following continued increases in crude oil prices.

In the bond market, the continued rise in crude oil prices has increased market participants' concerns that the disinflation process could be disrupted, raising the risk that the Fed may keep interest rates high for longer than expected (Higher for Longer). This situation has driven the 10-year US Treasury yield above 4.60%.

This is despite the US 10-year bond yield rising above the 4.50% resistance level that we previously assessed. But we maintain the same view that Investors should gradually buy and accumulate long-term bonds. Especially during periods when bond yields are rising. By the present Many players in the market have short positions in long-term bonds. If there are factors that change the Higher for Longer view, we think that gradually closing short positions may help support bond yields to adjust downward easily and may You can see a rapid decline in the short term.

In the currency market, the US dollar continued to strengthen against major currencies, supported by concerns that the Federal Reserve may maintain high interest rates for an extended period. This aligns with the rise in the 10-year US Treasury yield, causing the dollar index (DXY) to gradually break through the key resistance level around 106.6 points (range 106.2-106.9 points).

Regarding gold prices, the continued rise in both US 10-year bond yields and the US dollar has pressured gold prices (COMEX December gold futures) to fall further to $1,895 per ounce (as we estimated, there is a risk that gold prices could easily fall to $1,900 per ounce). We believe that some market players may still be buying gold on dips, and this transaction flow is contributing to the weakening of the Thai baht.

Today's key highlights will be important US economic data reports, such as Q2 GDP and jobless claims. If US economic data continues to exceed expectations or reflects a strong US economy, it could further fuel market concerns about a "higher for longer" outlook for the Fed's interest rates, potentially leading to a further rise in the dollar and 10-year US Treasury yields.

and in addition to the aforementioned economic data reports Market players will be keeping an eye on the statements of key central bank officials, including the Fed and ECB, to assess the outlook for monetary policy in the next period.

Regarding the Thai baht's outlook , we believe that after the baht weakened and broke through the key resistance level of 36.50 baht per dollar, as we had estimated, even though the Bank of Thailand proceeded to raise interest rates to 2.50%, contrary to most market players' expectations (but in line with our forecast), it was unable to slow the baht's depreciation. The key factors still pressuring the baht are the flow of gold purchases during dips, the strengthening of the US dollar, and selling pressure on Thai assets from foreign investors, particularly in the bond market, which may continue to some extent after the 10-year US Treasury yield continued to rise to a new high.

This picture requires us to adjust our perspective and reassess the possible resistance levels of the Thai baht, as well as its weakest point. Technically, the baht has a resistance zone in the 36.65-36.85 baht per dollar range. If the baht weakens below this zone, there is a risk that it could depreciate rapidly towards the 37.15-37.25 baht per dollar zone.

However, we have re-evaluated the possible weakest point of the baht by referring to the baht's valuation from the REER baht index. We found that the possible weakest point of the baht (REER's Z-Score is approximately -2.0 times). It will be approximately 37.50 baht per dollar. This is somewhat higher than our previous assessment on June 28, around the level of 36 baht per dollar.

However, the baht may receive some support and the depreciation may slow down. If foreign investors gradually buy more Thai stocks after the SET Index has recently dropped to an important support zone. and close to the period when Thai political risks are hot It makes us think that at present political risks have been greatly reduced. In addition, the Thai economic outlook remains bright. In addition, the price level (valuation) of Thai stocks is not expensive. This factor should encourage foreign investors to gradually accumulate Thai stocks during the contraction period as well (incidentally, Krungthai CIO recommends that investors gradually accumulate Thai stocks. with a short-term target SET around 1,540-1,550)

We still view Every asset is still in a period of high volatility. from both the uncertainty of the direction of monetary policy Concerns about the prospect of Chinese economic recovery causing us to maintain the advice that Entrepreneurs should use a variety of hedging tools, such as Options, to increase efficiency in hedging against exchange rate risk.

And in addition to using the aforementioned tools Choosing to transact in local currency is another interesting way to manage exchange rate risk. Entrepreneurs should compare transaction costs and hedging plans before making every decision.

Looking at the baht today It is expected to be at the level of 36.50-36.85 baht/dollar.

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