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Thai Baht Hits Seven-Month Low Amid Political Uncertainty and Dollar Strength
(CTN News) – Amidst political and business uncertainty, the Thai baht has plummeted to a seven-month low, unseen since last November, intensifying investor concerns.
This decline aligns with a universal decrease in the value of several emerging Asian currencies against a strengthened US dollar, fueled by robust US economic data that has allayed fears of a recession.
Regional stock markets present a bleak picture, with Seoul’s shares experiencing a pronounced plunge of 0.8%. According to a report by Reuters, philippine and Chinese shares also faced losses of 0.3% and 0.5%, respectively, reflecting ongoing business uncertainty.
The Thai baht has devalued by 0.6%, reaching its weakest point since November 30, 2022. This raises questions about the ability of the lead candidate to secure sufficient votes for the prime ministerial position in the upcoming inaugural session of the new parliament.
Alvin Tan, Chief of Asia FX Strategy at RBC Capital Markets, expressed skepticism about the Move Forward coalition’s capacity to gather the necessary votes to form a new government.
Tan further projected an extension of Thailand’s political deadlock and uncertainty if the nation fails to establish a new government by the following week.
Yesterday, the Bank of Thailand (BoT) announced its intention to further relax foreign exchange regulations in the latter half of the year. This move aims to promote capital outflows as the baht remains turbulent. The currency has already experienced a reduction of 2.2% this year alone.
In another part of the region, the South Korean won witnessed a 0.3% fall, while the Philippine peso and Singapore dollar registered lesser devaluations of 0.2% and 0.1%, respectively.
Meanwhile, US data indicates heightened consumer confidence in June, reaching a peak unseen for approximately one and a half years. This suggests a stable economy despite looming recession threats.
“All major data in the US definitely raises bets that there is a possibility of the US Fed hiking interest rates again in July and that they will not be cutting the interest rates quickly this year also,” added Tan.
The Chinese yuan saw a modest uptick of 0.04% to counter the trend. This comes as indications arise that the central bank has become concerned about the recent currency downturn due to surrounding business uncertainties.
