CIMB Thai Bank expects the Thai baht to end this quarter at 33.50 per US dollar, due to the Federal Reserve's tapering which prompts outflows from emerging markets.
Yet, lower confidence and shattered investment sentiment due to political situation would cushion the impact. Due to political conflicts, demand for dollar to finance capital goods imports would stay low. The baht would thus not depreciate sharply against the greenback, said Amornthep Chawla, vice president and head of economic and financial market research.
"Thailand can't avoid capital outflows. Our foreign reserves have fallen by 7 per cent from mid-January 2013 while the baht has weakened about 10 per cent. We still need to prepare for a new round of capital flight, as foreign investors may unload all risk assets in emerging markets. They may adopt a universal view on the emerging market outlook, not to take into account the Thai economic fundamentals," he said.
At 4.15pm, the Thai baht weakened to 32.96 per US dollar, against 32.90 yesterday.
A source at the Bank of Thailand told Krungthep Turakij that the exchange rates would be a bit vulnerable. However, balanced macro-economic policies should cushion any negative impacts.