Baht volatility looms amid political risk and new government formation

Kasikornbank (KBank) has warned investors that the formation of a new government and political risk may result in increased baht volatility over the next month. The bank forecasts that the baht will fluctuate between 33.80-35.40 per US dollar during this period due to various internal and external factors. The primary determinant is the direction of the US Federal Reserve’s policy rate.

KBank believes that domestic politics will influence baht volatility after the next four weeks. The Federal Reserve is expected to raise its policy rate by a quarter of a percentage point twice more this year, beginning in September and continuing in December.

“Domestic politics is a risk factor that could trigger baht fluctuation against the dollar,” said Kobsit Silpachai, head of KBank’s capital market research department. “Investors are concerned about the…