Most Asian Currencies Fall, Thai Baht Tends To Hit High In Two Weeks

BENGALURU (Jan 4): The Thai baht strengthened to a more than two-week high on Tuesday (Jan 4), kicking off the new year on a positive note, as investors looked beyond the clouds thrown away by the spread of the Omicron coronavirus variant, while most of the other Asian emerging currencies have weakened.

Entering a fourth consecutive session of gains, the baht appreciated 0.3% to 33.26 per dollar, its highest since late November.

The Thai currency’s strong start through 2022 comes after suffering its worst decline in two decades. The baht depreciated 11% last year as the Covid-19 pandemic hit Thailand’s key tourism sector.

Elsewhere, the prospect of an early rise in interest by the U.S. Federal Reserve (Fed) despite rising Covid-19 cases has put Asian currencies on the back burner.

The Philippine peso depreciated 0.4% to a more than three-month low, while the Indonesian rupiah, ringgit and South Korean won each weakened by around 0.3%.

The US dollar index, which measures the currency against the yen and five other major peers, weakened slightly but held near the one-week high of 96.328 reached on Monday.

Overnight, all three of Wall Street’s major indices finished strong, as U.S. Treasury yields rose on expectations of an earlier-than-expected rate hike as inflation fears outweighed the rise in Covid-19 cases.

“The markets seem to have retained memories of 2021 and have placed Omicron as a backdrop with a focus on Fed rate hikes leading to higher US Treasury yields and supporting the strength of the US dollar as well as the continued momentum in equities, ”Mizuho Bank analysts said in a note.

Poon Panichpibool, market strategist at Krung Thai Bank, said the continued impact of the Omicron variant and the likely Fed tightening could prevent any sharp appreciation of the baht.

He expects the Thai currency to remain in a range between 32.75 and 33.50 per dollar before strengthening by the end of 2022.

“For the second half of the year, an improving economic recovery in Thailand and elsewhere should support more flow of funds to emerging markets and Thailand. At the same time, a small current account deficit could help the baht reach between 31.75 and 32.00 by the end of this year, ”Panichpibool added.

Elsewhere, the Chinese yuan fell 0.4% to 6.3695 per dollar on its first trading day of the year, while the Japanese yen weakened 0.4% to its lowest level since early 2017 after falling for a fifth consecutive session.

Shares of Singapore, Thailand and Indonesia were up 0.5% to 1.2%, while Malaysian stocks were down 0.8% on their second day in the red.

Meanwhile, the Philippine stock exchange suffered an unexplained delay in opening. He said he would issue a statement.

Strong points:

  • Indonesian 10-year benchmark yields increased to 6.391%
  • China will require some companies to pass cybersecurity exams before registering overseas
  • Oil prices stable ahead of OPEC + production policy meeting
  • India has reported most Covid-19 cases since early September