Comment: Thai baht strengthening

We’ve longed thought aloud that the Thai Baht should eventually return to THB 25/usd over the past few years and we continue to think this going forward. Yes people yell at us, “charlatan! fools! It will never go back!” and we’ve been hearing the same comments since we begun working here in 2004-5 when the baht was at high 30’s to the USD.

Look, the fact remains that the Thai economy is growing faster than the US, the 10 year yield rate is higher than the US, and almost every other SE Asian currency is near or has surpassed its pre-’97 levels. And its only going to be a matter of time before the Thai Baht does as well.

Also our lovely chartist friend, Ploy, sent around this comment below last month with her thoughts from a technical level on the baht. Enjoy!

Thai baht has been the strongest currency in the region for the past month. Many are wondering where it will be likely to head to. Here is some thought on the Technical analysis side.

thai baht

In the medium-term picture, Thai baht reached its trough against the U.S. dollar in June last year; notice the Y-month cycle in the upper part of the chart and the blue resistance line. Since then, Thai baht has strengthened against the major currency, even in time that investors flee from the euro and hold more of the greenbacks. Thai baht reached 29.00 THB/USD level on Wednesday. My chart shows that the currency may continue its decline for a longer while.

The X-month cycle in the lower part of the chart means that THB/USD exchange rate may head downward (aka. Thai baht strengthens against the U.S. dollar) until July, 2013. We have a few more months to go. And, I found the 26.70-26.65 THB/USD support lines, marked by the blue lines. So, Thai baht may continue to strengthen against the U.S. dollar towards the 26.xx THB/USD level, and until July.

thai baht_day

In short-term picture, Thai baht has slightly strengthened against the U.S dollar in the past two days. While we may have a short-term opportunity to Short Baht and Long Dollar, keep in mind that the major trend is still a downward one.  The currency faces the resistances at 29.36 THB/USD and 29.60 THB/USD, and supports are at 29.15 THB/USD and 28.92 THB/USD.

Many may call the 26.xx THB/USD level a crazy one. Even I am amazed, because for a country that relies heavily on the exports, strengthened local currency is absolutely negative to the overall economy. But, well, the chart says it, and we may be better off if we keep that probability in mind. 

Thanks again Ploy!

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5 thoughts on “Comment: Thai baht strengthening”

    1. Simple, the democrats will whine like the fools they are complaining that it was an unconstitutional election b/c they weren’t a part of it. Protests in Bangkok will then continue.

      Only outcome I see is what the courts are going to do, if they uphold the law and complete all of the cases then Yingluck and Abhisit could both be out of politics.

  1. I think your spot on interesting they denied the 16 arrest warrants for the core protestors

    Looks like the FED may effect things this week

    I won’t waste anymore of your time thanks

    1. Feel free to keep asking away, I find it beneficial because you may ask a question no one ever has before, and it helps me form my thoughts as well.

  2. I think it would b next to impossible to chart the Baht at the moment, to many wild cards.

    The biggest I can think of for the baht is the FED raising interest rates, sometime in the next 18 Months. Some think sooner.

    I would love to see a more current chart.

    Good work Ploy to many moving parts since your last chart


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