Currency Analysis Report 11/25/19 – Is Thailand Cutting Rates Next???

Exotic pairs usually consist of a major currency alongside a thinly traded currency or an emerging-market economy currency, so they are a lot less liquid and prone to “slippage” which also means they have wider spreads than the majors and the crosses.  Because of this, exotic pairs don’t get a lot of shine.

The Thailand currency is call the Baht. And as strong as the US dollar has been against all the major currencies this year, the Baht has been stronger than the US dollar. The Thai baht hit a six-year high against the dollar in September which is making Thailand exports have become more expensive.  In additional, relationship between Thailand and China has also left the Thailand business in a bind due to the devaluation of the yuan in August making Thailand exports less competitive.  Ultimately this is hurting the Thailand economy.  Business leaders are now urging the their government to prioritize curbing or reducing the value of the baht.

The Bank of Thailand is prepared to use monetary policy if economic growth disappoints, its Governor Veerathai Santiprabhob said.

“In the short term, we are ready to use monetary policy if needed,” Veerathai said Saturday during a visit to Laos. “We are ready to act if growth fails to meet our expectations.”

At the same time, he cautioned against taking the benchmark interest rate below zero, saying that “the key rate shouldn’t be negative, as it will create lots of structural problems.”

Veerathai said the central bank is concerned about baht strength and is monitoring the situation closely as the year-end approaches, because it’s a period that tends to have a high volume of foreign-exchange transactions.

Veerathai said inflation isn’t a big problem for Thailand at present but financial stability risk has become a challenge for monetary policy.


So where is the Baht heading, 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 down.

Daily Chart (Entry Time Frame) – the chart suggests to short price on a pull back if price can to the daily supply at 30.90 with a target just above the top the of the monthly zone.

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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