Thailand saw strength in its currency “baht” today as expectations are high for the relaxing of quarantine for vaccinated visitors under “Test & Go” quarantine exemption scheme. Registration for the entry scheme was closed last month, but the Public Health Ministry is proposing the scheme be reopened again. The Public Health Minister says that if approved by the Centre for Covid-19 Situation Administration, the registration for the scheme can resume on February 1.
Treasuries surged throughout the curve during Asia hours as investors braced for a more hawkish Federal Reserve, with two-year rates, which mirror short-term rate forecasts, crossing 1% for the first time since February 2020. With the exception of China (.SSEC) and the Philippines (.PSI), it was less than half 1%, though developing Asian stock markets were higher.
Doubts are increasing that the Central Bank will begin tightening in March if the markets do not expect an interest rate hike next week, with investors eyeing the Fed’s meeting on January 25 to 26. Earlier, the baht rose as much as 0.7%, which passed its highest level since November last year, before reversing most of its gains to trade 0.3% higher. Stocks (.SETI) also momentarily reached a new high for the year.
The OCBC analysts say “Expect the baht to benefit from this feel-good development”.
“This push may well be speculative, as there are still no signs that tourist inflows will return in sufficiently large numbers to justify sustained baht appreciation.”
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