Global Markets Group, Krungsri Bank Public Company Limited hasa view on the direction of the Thai baht this week, predicting it will move within the range of 31.00-31.40 per dollar compared to last week's closing rate of 31.23 per dollar, following the Monetary Policy Committee's (MPC) decision to lower the policy interest rate. Foreign investors sold a net of 6.2 billion baht in the Thai stock market and 2.5 billion baht in bonds, while the yield on Thai bonds has continuously hit record lows.

         Investors will be monitoring the policy statement from the Chair of the U.S. Federal Reserve to Congress, as well as U.S. inflation figures and retail sales, after several economic indicators from the U.S. released last week were surprisingly strong. This contrasts with the Eurozone economy, which continues to show signs of weakness. Meanwhile, the ongoing pandemic and news regarding treatments for the coronavirus have been putting pressure on emerging market assets and crude oil prices recently. However, it will be interesting to see if a significant correction in the U.S. stock market, which continues to reach new highs, would lead to a strengthening of the yen.

        Regarding domestic factors, the MPC has lowered the policy interest rate to a record low to help mitigate the impact of the coronavirus pandemic, delays in the budget bill, and drought, which will significantly affect businesses and employment. This move also aims to support liquidity and debt restructuring for businesses and households severely affected by the economic slowdown. Additionally, the MPC assesses that even though the baht has depreciated somewhat, it may still not align with the fundamental factors of the Thai economy and is likely to remain volatile. The Governor of the Bank of Thailand stated that addressing the baht's value will require more liberalization for overseas investments, and in the future, exporters may be able to hold more funds abroad.

         Interestingly, the Governor of the Bank of Thailand believes that the recent interest rate cut may not significantly boost the economy since interest rates are already low. However, after the latest cut, there remains policy space available if the situation worsens. This stance leads us to assess that there is an increased likelihood that the MPC will decide to make another symbolic interest rate cut this year amid the downside risks to economic growth, which are dragging expansion below potential.

Thank you for the information from Global Markets Group, Krungsri Bank Public Company Limited.