The Thai baht has been one of the best-performing emerging market currencies in 2023 as the economic recovery gains steam. The USD/THB exchange rate was trading at 33.65, the lowest point since February this year. It has retreated by more than 4.87% from the highest level this year.
Thailand election ahead
The USD/THB, GBP/THB, and EUR/THB pairs have soared because of the strong recovery of the Thai economy. In a report in March, SCB predicted that the country’s economy will expand by 3.9% in 2023 after expanding by 3.4% in the previous year.
The country is benefiting from the robust tourism industry. In the first quarter, Thailand welcomed over 6.15 million visitors in the country and the government hopes that the number will soar to between 25 million and 30 million this year.
Economic data are supportive of the country’s economy. For example, after peaking at 7.86% in September last year, inflation has continued falling to stand at 2.67%. In contrast, analysts expect that America’s inflation remained at 5.0% in April.
The next key catalyst for the USD/THB pair will be the upcoming election, in which the country will elect 500 seats in the lower parliament. As a result, parties are expected to join forces to form government. The prime minister will be decided by both the lower and upper houses. Senate members have been selected by the ruling military.
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It is unclear how the Thai baht will react to the outcome of the election. However, if everything goes on well, there is a likelihood that baht will do well if the election is peaceful.
USD/THB technical analysis
The 4H chart shows that the USD/THB exchange rate has been in a bearish trend in the past few weeks. It has moved below the key support level at 33.78, the lowest point on April 5 of this year. The pair remains below tall moving averages.
At the same time, the pair has formed what looks like a small double-bottom pattern at 33.61. It has also formed an inverted cup and handle pattern, which is usually a bearish sign. Therefore, the pair will likely rebound slightly ahead and after the election and then resume the bearish trend. If this happens, the pair will drop to about 33 in the coming weeks.
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