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After Fed decision – Waiting for BOE and ECB Response, Baht is Expected Weaker

Kasikorn Bank’s Capital Market Business Division estimates that the baht is likely to move within the 33.00-33.70 range this week after the Fed meeting signaled an early rate hike, which strengthened the dollar. As a result, the Thai baht came under pressure and the Asian currency could depreciate sharply.

This week, the U.S. market is waiting for the labor market figures. The unemployment rate and the change in non-farm payrolls will be announced on Friday.

Monetary Policy
The European Central Bank (ECB) and the Bank of England (BOE) will each meet on Thursday, given the pressure on monetary tightening by the Fed. For the near future, experts do not expect any changes in monetary policy at the ECB for now, while at the BOE a further increase of 0.25% to 0.5% is expected.

For Thailand, the Bank of Thailand will release the December current account this week. This is expected to be weighed down by a trade deficit of $354 million. In addition, it will release inflation figures for January. With meat prices and the cost of living rising, inflation is expected to accelerate to 2.48%.

Geopolitical tensions intensified as the United States recalled ambassadors and family members from Ukraine and considered action against Russia. Meanwhile, Europe warned Russia that it would take action against Russian aggression in light of Russia’s tough stance and its demands on NATO. This sent crude oil prices soaring above $90 per barrel, the highest level since 2014.

Russia is a major oil producer, accounting for 11% of the world’s oil supply.

There are also geopolitical tensions between the EU and China. The EU filed a complaint with the World Trade Organization (WTO) over Chinese trade restrictions on Lithuanian goods.

Lithuania has granted Taiwan permission to establish a representative office under the name Taiwan. This has prompted China to restrict relations with Lithuania and recall diplomats from the country.

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