wowpow
August 18th, 2006, 05:15
The Nation: Experts see baht at 35.50 per dollar
The Thai baht is expected to strengthen further - even test the Bt35.50 resistance level against the US dollar - because the Bank of Thailand (BOT) is unlikely to buck the global currency trend and seeks only to ensure that the baht's adjustment to the dollar's depreciation is consistent with other Asian currencies, experts said yesterday.
Robin Wilkin, a JP Morgan Chase technical strategist in London, was quoted by Reuters as saying the baht could potentially rise a further 5-6 per cent against the US dollar before meeting resistance on the charts.
He said he expected a move towards between Bt36.50 and Bt35.50, representing the baht's strongest point since 1998-99. After breaking through the Bt37.44 level last week, the baht should be stronger and the US dollar's bearish position confirmed.
Meanwhile, DBS Group Research said recent intervention by the Thai central bank did not mean the BOT wanted to dictate the baht level against the US dollar.
"What the BOT wants is to ensure that the US dollar's downward adjustment is consistent among the baht's Asian peers," it said. This explains why the US-dollar/baht rate has been tracking the US-dollar/Singaporean-dollar rate, with a 91.7-per-cent correlation, more closely than the US-dollar/yen rate, showing only a 40.2-per-cent correlation.
"In other words, the BOT may just be complaining about the divergence between the US dollar/baht [rate] and the US-dollar/Singaporean-dollar [rate]," said DBS.
The baht closed yesterday in Asian trading at Bt37.58 to the US dollar, after reaching a six-year high on Friday.
The Thai baht is expected to strengthen further - even test the Bt35.50 resistance level against the US dollar - because the Bank of Thailand (BOT) is unlikely to buck the global currency trend and seeks only to ensure that the baht's adjustment to the dollar's depreciation is consistent with other Asian currencies, experts said yesterday.
Robin Wilkin, a JP Morgan Chase technical strategist in London, was quoted by Reuters as saying the baht could potentially rise a further 5-6 per cent against the US dollar before meeting resistance on the charts.
He said he expected a move towards between Bt36.50 and Bt35.50, representing the baht's strongest point since 1998-99. After breaking through the Bt37.44 level last week, the baht should be stronger and the US dollar's bearish position confirmed.
Meanwhile, DBS Group Research said recent intervention by the Thai central bank did not mean the BOT wanted to dictate the baht level against the US dollar.
"What the BOT wants is to ensure that the US dollar's downward adjustment is consistent among the baht's Asian peers," it said. This explains why the US-dollar/baht rate has been tracking the US-dollar/Singaporean-dollar rate, with a 91.7-per-cent correlation, more closely than the US-dollar/yen rate, showing only a 40.2-per-cent correlation.
"In other words, the BOT may just be complaining about the divergence between the US dollar/baht [rate] and the US-dollar/Singaporean-dollar [rate]," said DBS.
The baht closed yesterday in Asian trading at Bt37.58 to the US dollar, after reaching a six-year high on Friday.