Bangkok: The baht experienced fluctuations following the announcement of tariffs by US President Donald Trump. Financial experts advise utilizing a broader spectrum of tools to mitigate exchange rate risks, as gold prices surged once more after Trump's declaration of a 30% tariff on imports from the European Union (EU) and Mexico.
According to Thai News Agency, the baht traded between 32.43-32.45 baht to the dollar this morning, compared to last Friday's closing rate of 32.51 baht to the dollar. Kasikorn Research Center indicated that the baht's appreciation aligns with the global gold price increase, driven by apprehensions surrounding Trump's trade tariff policies. Nonetheless, currency volatility may persist throughout the day, as the regional sentiment has weakened due to rising trade tensions following Trump's tariff announcements on Canada, the EU, and other partners, with potential increases in basic tax rates.
The Global Markets Group of Bank of Ayudhya Public Company Limited anticipates the baht to oscillate between 32.10-32.80 baht/dollar this week. Last week, the baht weakened, closing at 32.52 baht/dollar after trading within the 32.40-32.72 baht/dollar range, while the dollar strengthened against major currencies.
As trade tensions escalate with Trump's announcement of 25% tariffs on Japan and South Korea, and 35% on Canadian goods effective August 1, Thailand faces a 36% tariff, consistent with the April 2 announcement. Additionally, retaliatory tariffs on sectors like copper and pharmaceuticals, and a 50% tariff on Brazil, which holds a trade deficit with the US, are perceived as politically motivated. Markets are also observing US inflation and retail sales data to predict the Federal Reserve's interest rate decisions.
Poon Panichpiboon, a strategist at Krungthai GLOBAL MARKETS, Krungthai Bank, projects the baht's exchange rate to range between 32.10-32.80 baht/dollar this week. He recommends diverse hedging tools to manage exchange rate risks amid heightened currency volatility, suggesting options like Options or Local Currency alongside Forward contracts.
This week, market focus includes Thailand's international trade figures for June, which might expand by over 15% due to accelerated imports before US tariffs and increased demand for Thai tech products. However, US trade policies are expected to pressure Thailand's export figures in the year's second half.
The baht's depreciation momentum has slowed, supported by gold price appreciation. If gold prices continue rising, sustained baht depreciation may be challenging. According to a Trend-Following strategy, the baht may return to a depreciation trend if it breaks through the 32.70-32.80 baht per dollar zone. Meanwhile, US trade policy uncertainties might bolster the dollar in the short term.
Gold futures increased this morning as investors sought gold as a safe asset post-Trump's announcement of a 30% tariff on EU and Mexican imports, effective August 1. At around 7:00 AM, COMEX for August delivery rose $20 to $3,384.00/ounce.