Believe it or not, Thailand is one of the world’s largest exporting countries in the world. Although, automobiles, financial services, and tourism are some of the biggest industries in Thailand, Thailand's remains dependent on exports. The commodities that Thailand exports the most is refined petroleum, rubber, rice, raw sugar and gold and Thailand’s top exporting partner is the US. With a positive trade balance, it’s no wonder Thailand’s currency appreciated so much in 2019.
The Thailand currency is call the Baht. And as strong as the US dollar has been against all the major currencies in 2019, the Baht held its own against the US dollar. The International Monetary Fund forecasts the Thailand ended 2019 with a 6%+ GDP, almost double that of Japan. But there is a trade-off between GDP and currency valuation. In the case of Thailand, as the Baht appreciated, the commodities that they export become more expensive, ultimately hurt their economy.
Despite this cause and effect, Thailand has been able to attract foreign money. Thailand’s reserves and negligible inflation has allowed foreign investor so sleep a bit more sound at night. Their central bank’s foreign-cash pile stands at more than $200 billion, the equivalent of more than 12 months of imports.
However, 2020 isn’t shaping up to be another 2019 thus far.
The battle over the Thai baht intensified in the new year, with the currency dropping sharply even before domestic markets opened.
The baht plunged as much as 1.8% on Thursday, the biggest decline since 2007, to 30.226 against the dollar in early Asia trading. That almost erased all the gains it made in the past three sessions. The currency was trading at about 30.11 against the dollar as of 8:31 a.m. London time.
“It’s likely to be central bank intervention given that the central bank has mentioned that they’ll be fighting against baht strength,” said Mingze Wu, a foreign-exchange trader at INTL FCStone in Singapore. It may also have been due to traders betting the baht will strengthen overextending their positions, he said.
So where is the Baht heading next, 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 to the daily supply at 31.350 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.