It has the possibility to fall further to 34 on a weaker USD – DBS

THB has retraced more than 80% of this year’s losses against the USD, notes DBS Senior FX Strategist Philip Wee.

Bears may push towards 34 on a weaker USD

“In the first four months of this year, USD/THB has risen from 34.0 to 37.3 on the Fed’s ‘higher for longer’ rate stance to fend off the market’s aggressive rate cut bets. In early August, the Bank of Thailand announced plans to raise the annual withdrawal limit to $200,000 from $50,000, reflecting its confidence in the stability of the THB.

“Although the Thai constitutional court dismissed Srettha Thavisin as Prime Minister last Wednesday, USD/THB closed below 35 last week for the first time since mid-August 2023. USD/THB has the opportunity to decline in continued at 34 to a weaker USD and the kingdom moved quickly to defuse political leadership uncertainty’.

“Over the weekend, Thai King Maha Vajiralongkorn granted former Thai Prime Minister Thaksin Shinawatra a royal pardon and named his daughter Paetongtarn as the new Prime Minister.”