PATTAYA, Thailand – The Thai baht is expected to trade within a range of 32.50 to 33.20 per U.S. dollar this week as investors closely monitor U.S. inflation data and evolving Federal Reserve policy signals, according to Krungsri Global Markets. The forecast follows a week in which the baht weakened, closing at 32.83 per dollar after trading between 32.51 and 32.94. The U.S. dollar strengthened against all major currencies, with the dollar index reaching its highest level in more than a year. Krungsri noted that the Bank of Japan raised its policy rate to 1.00% as expected while maintaining a gradual approach toward future rate increases. Meanwhile, crude oil prices declined as geopolitical tensions eased.
Despite lower energy prices, U.S. Treasury yields climbed after the Federal Reserve kept interest rates unchanged at 3.50–3.75%. New Fed Chairman Kevin Warsh reinforced a firm stance against inflation, reducing expectations of near-term rate cuts. Some market participants have even begun pricing in the possibility of a U.S. rate increase later this year. Foreign investors remained cautious toward Thai assets, recording net sales of 494 million baht in Thai equities and 912 million baht in bonds during the past week. Looking ahead, Krungsri said investors will focus on the release of the U.S. Personal Consumption Expenditures (PCE) Price Index for May, the Fed’s preferred measure of inflation. The data is expected to provide further clues about the direction of U.S. monetary policy under Warsh’s leadership.
The bank noted that the new Fed chairman has been changing the central bank’s communication strategy by placing less emphasis on forward guidance. As a result, bond market volatility could increase, while investors may pay less attention to the Fed’s traditional “dot plot” interest-rate projections. Krungsri also said that if a lasting agreement between the United States and Iran is achieved, lower energy prices could contribute to a clearer downward trend in inflation toward the end of this year and into 2027. Under such a scenario, inflation in the United States may already be near its peak, making additional Fed rate hikes less likely despite the central bank’s more hawkish tone.
On the domestic front, Krungsri expects the Bank of Thailand’s Monetary Policy Committee (MPC) to leave its policy rate unchanged at 1.00% at its June 24 meeting. The bank believes current inflation pressures are largely supply-driven, while economic growth risks remain tilted to the downside. As a result, policymakers have limited justification for raising interest rates unless inflation accelerates significantly and remains above the target range for an extended period. For now, currency markets are expected to remain sensitive to incoming U.S. economic data, global interest-rate expectations, and developments in energy markets, all of which could influence the baht’s direction in the weeks ahead.
