Wednesday, August 20, 2008

Baht hits 9-month low, 34.15 per dollar

The Thai baht continued to weaken on Wednesday’s morning trading and broke through a psychological support level to stay at 34.15 to the US dollar, the lowest in 9 months, according to the Kasikorn Research Center.

The leading think tank attributed the sharp decline in the currency to the continued heavy buying of the greenback by foreign banks in Thailand and importers as the month-end nears.

It said the baht had weakened in the same direction of other regional currencies while the dollar continued to strengthen upon concerns over the global economic weakening.

An official at the Bank of Thailand said the baht had depreciated in tandem with other currencies in Asia as a result of the stronger dollar.

He affirmed the foreign capital had not flown out of Thailand quickly after foreign investors sold off shares in the stock market.

The central bank would move to supervise the stability of the market as necessary as it could.

KRC projected the baht would continue to weaken in the short run with a next strong support level of 34.20-34.50 to the dollar since the green is likely to strengthen further against Asian currencies.

The ongoing political uncertainty is another factor pressing investors to take greater caution in investment in the money market.

However, KRC viewed the weaker baht would help reduce impacts of negative factors the Thai export sector had got from the economic slowdown of many key trade partners including ASEAN, Europe, Japan and the United States.

Simultaneously, impacts on local prices would not be severe since the baht had weakened while prices of commodity products, particularly oil in the world market, had dropped.

However, the baht movement must be closely monitored because it could not only affect exporters and importers, but also undermine investor confidence in the money and capital markets. (TNA)

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