USD/THB: Repercussions of the Thai election shock on the Thai baht
The Thai baht rose modestly after the recent elections in Thailand. the couple US dollars / Thai baht It fell to 33.83, which is a few points below last week’s high of 34. However, an uneasy calm prevails after the country’s established military rule was taken by surprise by voters.
Thailand election results
Thailand held elections between pro-democracy parties and military rule. Opposition pro-democracy parties won a commanding lead and sent a rebuke to the military. The Move Forward party led the vote and was followed by the Pheu Thai partok, led by Paetongtrn Shinawatra.
On the other hand, parties associated with the military, such as the United Thai Nation Party, received about 12% of the vote. Palang Pracharath’s party got only 10% of the vote.
Although the outcome was positive, it carries significant risks for the Thai economy, which explains why BHT is a bit uneasy. First, Thailand has experienced several military coups in recent years. As such, another military coup in the coming years or months cannot be ruled out.
The military has a strong voice in the Thai economy. As I wrote in this article, the Constitution gives the military the role of choosing the Senate, which has about 250 members. The Senate votes jointly with the 500-seat elected Parliament.
Therefore, the Move Forward policy of reforming the army and the monarchy might lead to great problems in the government.
Another danger to the Thai baht is that governments that gain from a landslide tend to get frustrated with expectations that are too high. We’ve seen this in many countries, including the United States, where Joe Biden’s approval rating is at an all-time low.
Technical analysis USD/THB
The 4-hour chart shows that the exchange rate of the US dollar against the Thai baht declined slightly after the Thai election result. It moved as low as 33.71 and then snapped some of those gains. It is also consolidating on the 25-period moving average, while the relative strength index (RSI) and MACD indicators have been pushed lower.
Therefore, USD/THB is likely to continue falling in the near term as sellers target the key support level at 33.50. Then it will bounce back as the reality of Thailand’s future comes out. If this happens, the pair is likely to move to 34.50 by the end of the month.
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