A new low for the Thai baht is imminent, and not even a rate hike by the central bank is likely to halt its slide.
The Asian currency sank against the dollar for its third consecutive week, closing at 34.77 on Friday and heading toward February's new year-to-date low of 35.39. The biggest concern for the market right now is whether the opposition-led coalition will get enough support from the Senate, which has the power to select the PM, Mr. Zhang said.
The Bank of Thailand is scheduled to release its interest rate decision on May 31. The Central Bank is forecast to raise interest rates by 25 basis point to 2% after Governor Sethaput Suthiwartnarueput said earlier this month it will stick to its gradual and measured monetary tightening to curb inflation.
I don t think that the decision by the Bank of Thailand will have much bearing on the baht, given that low policy rates relative to regional peers means that the carry consider is negligible, said Galvin Chia, an emerging markets FX strategist at Natwest Markets in Singapore.
Other risks lie to the north in China, with some analysts, such as Goldman Sachs Group Inc., forecasting more gloom for the yuan. Investors will be watching China's purchasing manager index data, the same day as Bank of Thailand's rate decision, to see if the nation's economic rebound this year is still underwhelming.
Chia said China is Thailand's biggest trading partner and was its largest source of inbound tourists. The baht has tended to be sensitive to large movements in the yuan. In the US, traders are expecting the Federal Reserve's terminal rate to push up, resulting in a surge in the value of the dollar. Chia sees the dollar-baht testing its year-to-date highs in the coming weeks if recent dollar strength continues or the yuan extends its slide lower.
This week, key Asian economic data is expected to be released.
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