BANGKOK – Money speculators and investors were happy today as the Thai baht rose to 32.81 per dollar on Monday, its highest since April 2015, driven by strong third quarter economic growth data.
The economy expanded at its fastest annual rate in 4½ years, although the quarterly pace slowed, indicating monetary policy will likely remain loose to support still-sluggish domestic demand.
“Thailand’s third-quarter GDP released this morning was fairly strong so we see the baht staying fairly stable,” Mizuho Bank’s Chang said.
The baht firmed fractionally after the GDP news, gaining up to 0.09%.
Most Asian currencies were muted on Monday in the face of political uncertainty in Germany and lingering doubts about the prospects for US tax reform, dimming sentiment.
The dollar index, which measures the greenback against a basket of six rivals, was up 0.3% as the euro slid, hit by German Chancellor Angela Merkel’s failure to form a three-way coalition government, increasing the level of political uncertainty.
Merkel said on Monday she would meet the German president to inform him that she had failed to form a coalition government with the Greens and the pro-business Free Democrats (FDP) after the FDP unexpectedly pulled out of the coalition talks.
Recently, the dollar has been weighed down by uncertainty over US tax policy, notably cuts for business and the wealthy.
While the baht hit its highest in more than 2½ years, the Malaysian ringgit was up 0.1% at its highest for more than a year. The ringgit continued its gain after data on Friday showed that Malaysia’s economy expanded in the third quarter at its fastest pace in more than three years, raising expectations of a interest rate hike at the central bank’s next policy meeting in January.
“Even though we see a bit of a euro weakness having an impact on Asian currencies, there is also quite a bit of positivity within Southeast Asia where we have quite strong gross domestic product (GDP) growth numbers coming through from Malaysia and the Philippines that is likely to be quite supportive of these two currencies – at least in the near term,” said Wei Liang Chang, FX strategist at Mizuho Bank.
“So markets are likely to be paying attention to idiosyncratic factors especially given that you have quite a good story coming out of Asia.”
Losses in the region were led by an 0.2% decline in the South Korean won, and the Singapore dollar that slipped 0.2% because of the fall in euro.
The Indian rupee fell 0.15% after having led gains in the region in its previous session after Moody’s Investors Services upgraded its ratings on India’s sovereign bonds on Friday.
The Taiwan dollar was marginally higher ahead of balance of payment data due later in the day, while the Chinese yuan ticked 0.1% lower.