SCB FM points out that a prolonged war is driving up oil prices and weakening the baht to 33 baht, and warns of stagflation.

SCB FM indicates the Thai baht is depreciating at the fastest rate in the region, surpassing 32 baht. They are monitoring the Strait of Hormuz crisis, which is driving up oil prices. In a worst-case scenario, the baht could reach $130, pushing it close to 33 baht and risking stagflation. Exporters are advised to urgently manage their risks.

March 9 2569 Mr. Wachirawat Banchuen, Senior Financial Market Strategist. Commercial Bank of Thailand Ltd (public) It was revealed that the Thai baht weakened to above 32.00 baht per US dollar. Because investors are concerned that the war's impact on energy markets will be more severe than expected.

The price of Brent crude oil surged above $115 per barrel following news that Middle Eastern countries such as the UAE, Kuwait, and Iraq had reduced oil production after the Strait of Hormuz was closed for over a week. Only commercial ships with connections to Iran were still allowed to cross, causing a rapid decrease in global crude oil supply.

" The sharp weakening of the Thai baht and the soaring oil prices are similar to the case described. Worst case As previously estimated."

Both the Thai baht and the US dollar index were supported by weaker-than-expected US nonfarm payroll figures (Actual -92k vs. Expected +55k positions), preventing the US dollar index from strengthening above 100 and keeping the baht below 32.30 baht per dollar.

Mr. Wachirawat said that what needs to be watched closely going forward are the trends in oil prices and... Price-in The economic and market outlook currently shows opportunities arising. Stagflation (Stagnation + Inflation) more

• If the price... Brent oil The price remains at 110-120 dollars per barrel. And the US dollar index (DXY) remains close to 100, as expected. USDTHB It might be around 32.00-32.50. In this case, it is believed that the escalation of the war will not accelerate significantly, but the duration of the war needs to be monitored. If it drags on and oil prices do not fall, it could further impact the current account balance of net oil importing countries, especially Thailand, which would cause the Thai baht to depreciate even more.
• If the price... Brent oil Rising to $130 per barrel. And the US dollar index (DXY) rose above 105, as expected. USDTHB It could rise to close to 33.00 baht per dollar. Yes. In this case, we believe the market will price in stagflation, which might prevent the Fed from cutting interest rates. Inflationary pressure from rising oil prices could cause 2-year treasury yields to rise above 3.75%, as estimated in the worst-case scenario.

Regarding domestic issues, if the government implements measures to help stabilize domestic fuel prices... For example, using funds from the Fuel Fund could mitigate the impact on the Thai economy and stabilize the sentiment towards the Thai baht. This measure was previously used in late 2022 during the Russo-Ukraine war, which pushed global oil prices above $130 per barrel, causing the Fuel Fund to become in deficit by 1.3 billion baht.

Advice for entrepreneurs.

For exporters, the view is... USDTHB The higher level, around 32.15-32.50, is a level where additional selling is possible, but it might be advisable to sell gradually because there is still a possibility that the conflict will intensify and drag on, leading to... Upside The Thai baht is likely to continue weakening.

Additionally, clients may consider purchasing USDTHB Put options to potentially sell USDTHB at higher levels and hedge against a potential quick end to the trade war, leading to a rapid appreciation of the baht. Current data from Polymarket indicates only a 20-25% chance of the war ending this month, with a 30% probability of it extending to July 2026, reflecting a significantly increased risk this week.

For importers, it may be necessary to wait for the market to ease its concerns. If there is news that Iran has weakened, it could price out the risk of war in the market, causing oil prices to fall rapidly and the Thai baht to strengthen.

However, uncertainty remains high, so it might be worthwhile to consider purchasing call options to hedge against risk if the baht continues to weaken sharply. In addition, If there is a need to purchase. USDTHB It might be considered. Product enhancement To get a better rating. For example, with Forward Plus, due to the high volatility recently, selling options could allow you to buy USDTHB at a better rate than the spot price.

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