Baht to remain volatile despite foreign fund flows

Although positive domestic sentiment has supported baht appreciation against the US dollar, the local currency is expected to remain highly volatile amid persistent external uncertainties.

- SOMRUEDI BANCHONGDUANG

According to research centres, capital inflows have supported baht appreciation, pushing it below 31 per dollar this week as foreign investors returned as net buyers of Thai equities and bonds following Thailand's election.

After the election on Feb 8, the baht has been volatile, appreciating somewhat against the US dollar. On Thursday, the baht strengthened to 30.93 per dollar, marking its strongest level in two weeks.

The baht's strength against the greenback has been partly supported by continued foreign capital inflows into Thai equities and bonds, driven by improved investor confidence after the election, said Kanjana Chockpisansin, head of research at Kasikorn Research Center (K-Research).

More support has come from positive domestic factors. While internal sentiment has helped anchor the baht, external uncertainties continue to exert pressure, leading to fluctuations against the dollar, noted the research house.