Thai baht drives US inflation
Date 07 Feb 2022 time 19:52
Krungsri expects the baht to trade in a frame of 32.75 – 33.30, hoping for US inflation.
Global Markets Group Bank of Ayudhya PCL has a view on the baht’s direction this week that the baht is likely to move in a frame of 32.75-33.30 baht/dollar compared to last week, the baht appreciated at 32.99 per dollar following Trading within the range of 32.95-33.48, the dollar weakened once morest most of the major currencies last week. After the Bank of England (BOE) raised interest rates 25bp to 0.50% in a 5-4 resolution, with four members voting to raise interest rates 50bp to 0.75% to curb inflation.
The BOE will also begin cutting QE from £895 billion and reduce its bond holdings from £20 billion. Meanwhile, the euro rebounded from a 20-month low to a three-week high following the European Central Bank (ECB) kept its policy as expected but accepted the risk of rising inflation and opened the door. for the interest rate hike this year. The ECB confirmed the hierarchy of policy implementation. The asset purchase program must be terminated before interest rates are raised.
However, stronger-than-expected January employment data and US wage growth helped support the US bond yield and the week-end dollar. Risk assets such as the US stock market continued to fluctuate. The price of crude oil rose to its highest point in 7 years. Foreign investors bought net 2,280 million baht in the Thai stock market but sold 2,267 million baht in bonds.
Global Markets Krungsri Group views that investors will pay attention to the January inflation figures in the US to further assess the direction of the Federal Reserve’s (Fed) policy tightening. The dollar’s value is weakening as the market has received enough news of the Fed’s interest rate hike this year. Meanwhile, other leading central banks outside the United States began adjusting their policies as well. The rally in the euro reflected a significant stance of the ECB, the central bank that markets had previously expected to be the last in the world to normalize its policy. The German 2-year and 10-year Mabond Yield jumped 35bp and 25bp respectively.
for domestic factors The Monetary Policy Committee (MPC) is expected to maintain the policy interest rate at a record low of 0.50% on Feb 9, despite the headline consumer price index for Jan. Increased at the highest 9-month rate of 3.23% year-on-year but mainly as a result of energy costs The core consumer price index rose 0.52%, while the news that the Ministry of Public Health had the idea of not locking down but living with disease. should have a positive effect on the sentiment of the baht
