Baht Asia’s sole gainer
BANGKOK: The Bank of Thailand (BoT) is giving the baht — the most-loved emerging-market currency this month — one more reason to keep up its outperformance.
Piggybacking on a strong current-account surplus, the baht has braved developing market doldrums and topped returns among 24 currencies tracked by Bloomberg.
It is also the sole gainer in Asia this quarter. As investors await the Friday release of Thailand’s latest balance of payments data, a recent hawkish tilt by the central bank is adding to the currency’s allure.
There was less need now for an extremely accommodative stance since the recovery in the economy was clearer, said governor Veerathai Santiprabhob on August 20, adding that it could not go against the global trends in interest rate policy.
The baht’s stability and benign inflation have enabled Thailand to hold interest rates at a near record-low of 1.5 per cent even as countries including Indonesia, India and the Philippines have tightened.
Veerathai’s comments have prompted Nomura Holdings Inc to forecast a 25-basis point rate hike at the September 19 meeting.
Minutes of the BoT’s latest gathering showed officials discussed “conditions and appropriate timing to begin normalising monetary policy in the future”.
Technical analysis also points to potential gains for the currency, as the dollar-baht’s failure to breach a key resistance around 33.50 has seen the pair resume its downtrend.
Dollar-baht below its 50-day moving average on Monday, and may look to test support around 32.363 — its high from May 21, given the growing bearish momentum. The pair’s moving-average convergence-divergence has declined below zero, having already fallen below its signal line. A breach of the May high may see it head towards support around 32 in the medium term.
The baht is up 1.1 per cent this quarter. It is also the only currency showing a gain this month among 24 developing market exchange rates.