Bangkok April 2020

BUSINESS SUPPLEMENT
FOREIGN CURRENCY UPDATE
The U.S. Dollar strengthened
in value during the first part of the
month as stocks rose to record
highs even in spite of corona virus
fears rising. However, a breaking
point came and both stock markets
and the dollar fell quite dramatically.
The DXYDollar index,
an index that measures the U.S.
Dollar’s value against a basket of
major currencies, increased from
98.45 to 99.9, almost touching
the all important 100 mark before
declining quickly to 95.1 and then
settling around 97.3.Stock market
declines prompted the U.S. Federal
Reserve to cut rates twice in
emergency meetings, but other
central banks were also looking to
cut rates worldwide ensuring that
U.S. Dollar falls were curtailed
somewhat. The USDTHB cross
rate actually rose even in spite of
Dollar weakness signifying that the
Thai Baht also weakened during
the period, at a rate slightly faster
than that of the Dollar’s. Against
the Thai baht the Dollar rose from
31.13 to 32.17.
The UK’s historic departure
from the EU did not move the British
Pound, with the volatility in
stock markets and central bank
intervention having taken a front
seat. Against the U.S. Dollar, the
pound sat in a range of 1.2885 to
1.3030 but eventually gave up the
1.2800 level and hit a low of 1.2772
before moving back above 1.3200.
Then as market volatility picked up
and the BoE cut interest rates by 50
basis points, the pound quickly fell
to 1.2275. A largely non-existent response
from the UK government to
the Covid-19 situation also arguably
contributed to the declines. As the
pound has fallen this has been reflected
in the GBPTHB rate, which
moved from 41.32to 39.51
The U.S. Dollar vs. Japanese
Yencross rate moved from 112.06
to as low as 102.07, before recovering
to 105.35. These moves
occurred as the Yen cemented its
position as a safe haven currency
at times of stock market volatility.
The move was nearly 10 per
cent and it is expected that as
stock markets remain under pressure
the Yen will still see inflows.
The JPYTHB cross rate saw the
Yen fetching 0.3033 Thai Baht,
up from the 0.2782 level before
stocks started to take a dive.
The Russian Ruble saw additional
volatility weakening from
63.05 to 74.83 against the US
Dollar. This was a more volatile
month than has been seen
for several months before and
could signify a new trend. Much
depends on the direction of the
Dollar. Against the Thai Baht the
Ruble lost ground, moving from
0.495 to 0.430.
The Euro / U.S. Dollar exchange
rate moved quite quickly
from 1.0804 to 1.1448 before giving
up some of the gains to trade
down to 1.1116. It has acted as
the other side of the trade for Dollar
weakness, since the basket of
currencies that make up the dollar
index are mostly weighted towards
the Euro. It has also made
gains where the British pound
made losses. Against the Thai
Baht, the rate rose from 34.23 to
35.89.
FOREIGN CURRENCY UPDATE
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