Bank of Thailand Is Stuck Between A Rock & A Hard Place
The Thailand Baht has a great 2019, but declining exports, low agricultural prices and a drop in international visitors have put pressure on the Thailand economy and the Thailand Baht in the first couple of months of 2020.
In June, the Bank of Thailand expressed concerned about the Baht’s appreciation and added it’s ready to take steps to curb a climb that could imperil an already fragile economy. Now, the Bank of Thailand finds itself stuck between a rock and a hard place.
Progress toward a coronavirus vaccine is fueling optimism Thailand will soon reopen for mass tourism. Overseas investors are already piling into the country’s financial markets. Inflows into Thai sovereign bonds have jumped to the highest in 17 months in November, even though the month is less than half over.
It’s possible policy makers may make some reference to baht strength being a negative for the economy. Nonetheless, Bank of Thailand may be restrained from overt actions to curb the currency’s gains for fear of being put on the watchlist by the U.S
So where is the Baht heading next, lets go to the charts to find out?
Monthly Chart (Curve Time Frame) - monthly supply is at 35.750 and monthly demand is at 29.000.
Weekly Chart (Trend Time Frame) – the trend is sideways.
Daily Chart (Entry Time Frame) – the chart suggests to short price on a pull back to the break out area with a target at the monthly demand.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
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The Thai baht will continue to strengthen (sadly for me!) The government are trying to keep it stable but failing and due to US pressure and a soon to be released report about currency manipulation, which in the past has shown Thailand in a bad light and got themselves on a watch list, the government are too afraid to manipulate it at the moment to keep it lower.
The Baht needs to be weaker to encourage more foreign investment to make up for the huge loss of income due to their being no international tourism here. There are numerous stimulation packages for domestic tourism but the Thais don't spend like the Chinese do!
Your original title is quite correct though. They are absolutely stuck between a rock and a hard place!
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Thanks for the feedback, I believe the Bank of Thailand meets this week, so could be an interesting week for the Baht.
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