THB: Capital Outflow Measures = Weakness In Near Term
§ The
capital outflow measures were aimed at “deepen(ing) Thailand’s financial
markets by allowing greater flexibility and diversification for residents and
non-residents, and subsequently support the growth and development of the Thai
economy”, but have been perceived by the market as a THB-weakening measure.
§ USD/THB
has broken above the 33.00-figure as a result of the rate cut and the measures
introduced on 30 Apr as well as the seasonal USD strength in May. However,
upside could be capped by the still healthy current account surpluses as well
as nascent economic growth ahead. Post-May, dollar strength may peter-out
and the seasonality we see in May might retrace with the THB back below 33.00
vs. USD.
§ In
the near term, the USD/THB looks poised to test the psychological 34.00-figure
as our technical chart suggest. However beyond that, we will continue to assess
if the recent developments as well as incoming data justify a fundamental
revision to our forecast.
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