Halister News

(Bloomberg) -- USD/THB may consolidate near its year-to-date low in near-term even if Bank of Thailand reiterates its lack of desire for a strong baht, Bloomberg strategist David Finnerty writes.

• In the minutes of its Aug. meeting, central bank highlighted the “recent appreciation of the baht might not be beneficial to the ongoing economic recovery”
• Market-implied probability of a Fed rate hike at next week’s meeting is only 22%, signaling a low likelihood of a USD rally vs THB on a rate increase
  • Lack of a Fed rate hike this month is likely to encourage investors to continue their current search for yield; global funds have been net buyers of Thailand’s bonds and equities since the beginning of June, spurring baht strength
• Bank of Thailand is expected to leave its benchmark interest rate unchanged at 1.50%, according to 21 of 22 economists in Bloomberg survey, with one forecasting a 25 bps cut; decision due at 2:30pm local time tomorrow
• USD/THB down 0.1% at 34.869; FX pair touched 34.492 on Aug. 30, its YTD low
• NOTE: David Finnerty is an FX strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.