Global Markets Team, Krungsri Bank Public Company Limited anticipates that the Thai baht will move within the range of 32.75-33.30 per dollar this week, compared to last week's closing level of 32.50 per dollar. The baht has reached its weakest point in 15 months amid a sharp decline in bond prices. Foreign investors have net sold 26.8 billion baht in the Thai stock market and 35.6 billion baht in bonds, respectively.

The dollar has strengthened against all major currencies as investors are concerned about the impact of the coronavirus outbreak and are rushing to buy dollars as a safe-haven currency amid tight dollar liquidity. Additionally, several major central banks have implemented monetary easing measures to mitigate the effects of COVID-19, with the European Central Bank (ECB) announcing an asset purchase program of 750 billion euros, while the Bank of England (BoE) has lowered interest rates again to 0.1% and increased bond-buying measures.

The Global Markets Team at Krungsri believes that the market will monitor the dollar liquidity situation after the Federal Reserve has increased swap lines with other central banks. Furthermore, investors will pay attention to economic stimulus through fiscal measures amid signs of a global economic downturn due to the outbreak.

Domestically, it is expected that the Monetary Policy Committee (MPC) may decide to cut the interest rate by another 0.25% to a new low of 0.50% on March 25, following a special meeting on March 20, where a unanimous decision was made to lower the policy rate by 0.25% from 1.00% to 0.75%. The MPC indicated that the COVID-19 outbreak in the near future is more severe than previously assessed, which will significantly impact the economy, liquidity, and the functioning of the Thai financial market.

Following a joint announcement by the Ministry of Finance, the Bank of Thailand, and the Securities and Exchange Commission regarding liquidity support measures in the bond market last Sunday, we agree with the clear liquidity support mechanisms, which are divided into:
1.) Commercial banks purchasing units from money market funds and open-end bond funds holding quality assets can use these units as collateral to request liquidity from the Bank of Thailand.
2.) Establishing a liquidity support fund of 70 billion to 100 billion baht to invest in new private sector bonds from quality companies, although they may not be able to roll over all maturing bonds.
3.) The Bank of Thailand is ready to continuously purchase government bonds to enhance liquidity. We expect that the latest measures will help restore confidence and reduce volatility to some extent. However, we still need to monitor the global market conditions to answer the question of whether we have applied strong enough measures.