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The baht is likely to strengthen further after it appreciated beyond 34 to the dollar on Tuesday, as Donald Trump's inauguration speech disappointed investors, prompting heavy selling of the dollar for profit-taking, says Kasikorn Research Center (K-Research). The Thai currency traded at a two-week high of 33.97 to the dollar in early Asian morning trade on Tuesday, compared with Monday's close at 34.
30, after Trump refrained from imposing tariffs on his first day in office. The delayed tariff increases on imports from China and Canada, pending further impact studies, is contrary to Trump's campaign pledge to impose tariffs of 10-20% on all imports and 60% on China. The new president signalled potential policy moves in the coming days.
"Investors accumulated the dollar based on high expectations for Trump's trade policy, coupled with the likelihood the US Federal Reserve would cut interest rates less than forecast for 2025," said Kanjana Chockpisansin, head of the research, banking and financial sector at the think tank. "But Trump's speech changed their view." The Chinese yuan led gains among Asian currencies against the greenback as there was some relief, with Trump mum on immediate levies against the world's second-largest economy.
China's blue-chip CSI300 Index climbed 0.8% at the open, while an index of Chinese stocks traded in Hong Kong rose 1%. "We see a possibility for the baht to touch 33.
8 to the dollar this round. But the trend might reverse once Trump mentions China in his next policy move," Ms Kanjana told the Bangkok Post. Rakpong Chaisuparakul, senior vice-president at KGI Securities (Thailand), said there will be no announcement on the tariff war yet.
Trump also pledged to set up an "External Revenue Service" to study the trade situation with China and prepare proper tariff levels. "A moderate rise in US Index Futures and a decline in the US dollar is a positive early sign that investors are relieved by Trump's initial moves," he said. Therdsak Thaveeteeratham, executive vice-president of Asia Plus Securities, said as the baht gains strength against the dollar, it helps attract inflows to lift the flagging Stock Exchange of Thailand.
"But that will not happen overnight. If this trend continues, the Thai index will rebound gradually," he said..
