BKK_BUS_SUP_July19

BUSINESS SUPPLEMENT
FOREIGN CURRENCY UPDATE
TheU.S. Dollar dropped as
market sentiment shifted towards a
higher expectation that the Federal
Reserve will start on an interest
rate-cutting program in the U.S.
before long. This is based on weaker
economic data that many have
blamed on the tariff and trade war
escalations of late.The DXYDollar
index, an index that measures the
U.S. Dollar’s value against a range
of major currencies movedfrom
a high of 98.14 to a low of 96.56.
Against the Thai Baht,the U.S. Dollar
dropped quite dramatically from
31.98 to 31.24 dipped, a fall of more
than 2 per cent.
The British Pound remained at
the lows at around 1.2660 to the
U.S. Dollar then rose to 1.2752
mainly on Dollar weakness, not so
much the Pound’s strength. Yet, the
bounce was short lived. It gave up
those gains relatively quickly dropping
through the bottom of the recent
range to 1.2529. Against the
Thai Baht, the Pound fell through
the all-important 40.00 handle to
tradedown to 39.21, newsworthy
because it is its lowest level since
before the 1997 Asian Financial Crisis
some 22 years ago. (Has it really
been that long?). More pain could be
in store, with increasing political uncertainty
in the UK and still several
more months of vagueness before
the new Brexit deadline. Yet, some
longer-term traders might be looking
beyond these events and buying on
dips, which may partly explain why
the currency has been moving relatively
gently. Whether or not there
will be a watershed moment in the
currency culminating in a steep drop
or a steep rise remains to be seen.
The U.S. Dollar vs. Japanese
Yencross rate has continued to fall,
moving from a high of 110.65 down
to 108.18. This time the fall may not
be so much due to the Yen’s safe
haven status (since stock markets
turned broadly higher in the interim),
but mainly due to Dollar weakness.
The Japanese Yen vs. Thai
Baht spot rate stayed relatively flat
at 0.2865, indicating that the Yen
itself has not gained any significant
strength.
The Russian Ruble has continued
to remain flat with the rate moving
from 65.11 to 64.40 to the US
Dollar after hitting a high of 65.57.
The summit between Chinese and
Russian leaders did little to move the
cross rate. Against the Thai Baht,the
Ruble moved ever so slightly from
0.4844 to 0.4838 after hitting a temporary
high of 0.4957.
The Euro / U.S. Dollar cross-rate
rose from 1.1138 to 1.1340, partly on
comments from the ECB President
Mario Draghi and partly on subsequent
U.S. Dollar declines.Against
the Thai Baht,trade was choppy
but ultimately range bound, with the
cross rate moving very slightly down
from 35.49 to 35.38.
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