Thailand’s trade deficit for the month of June was over 40 billion baht, partly due to a 19% increase in the value of imports, especially energy. The figure includes a 10% increase in the value of exports. The Thai baht also weakened against the US dollar, said Krungthai Global Markets Strategist Poon Panichpibool today (Monday).

According to Poon, the baht is expected to fluctuate between 36.5 and 36.7 baht/US dollar today, and between 36.3 to 36.9 baht/US dollar this week.

He forecast, however, that the baht currency may further weaken, but will not break the 37 baht/US dollar threshold if China does not resort to widespread lockdowns to contain the spread of COVID-19 in the country.

He said that the reduction in the international value of the baht could be slowed down by short-term profit taking in the stock market by foreign investors and profit taking by some speculators, in anticipation of the better-than-expected recovery in the tourism business.

Poon predicted that the US dollar may strengthen next week, due to market upsets, with business performance reports and “risk-off” closures, adding that the US currency is likely to fluctuate further during the meeting of the European Central Bank and due to Purchasing Managers’ Index (PMI) report.

He said that the US currency may weaken if the European Central Bank decides to increase interest rates to boost the euro currency, but he warned that there are risks if Russia refuses to resume gas supplies to Europe, after repairs to the Nord Stream 1 pipeline, and if there is a lower PMI in the US.

He recommended that businesses use some tools, including options, to reduce their risk from foreign currency fluctuations and to improve their efficiency.

According to the SCB Financial Markets, the baht currency today is forecast to strengthen slightly against the greenback, which dropped last Friday.

The European Central Bank is due to meet this Thursday and it is predicted that it will increase the interest rate by 0.25%. This would be the first increase since 2011.