Thai Baht Gains as Dollar Looses Steam on FED Chair’s Take on Tapering and Inflation

FED ready to cut back on asset purchases however will not hike interest rates until next year

Last week on Friday Federal Reserve (FED) Chair Jerome Powell said U.S. central bank is on track to reduce policy support and to prepare for tapering. However, his comments extended not to have any plan increase interest rate yet.

In a virtual conference he said, “I do think it’s time to taper; I don’t think it’s time to raise rates”. He remains put on inflation being transitory citing the accelerating inflation would abate once pressures from the pandemic fades.

The FED chair believes the agency’s target to meet full employment would be achieved next year once service sector is fully opened up and constrains due to bottlenecked supply chain eases.

The market now expects the first-rate hike would follow in 2022 with some market participants believing rates hike like to see in June and December 2022 and rates likely to see hikes four times by September 2023.

The dollar softened on Monday as traders factoring in inflation and rate hikes.

The dollar index (DXY) is at 93.503 inching down by 0.11% with the dollar weakened sharply against the Yen at 113.67.

Thai baht edged as the greenback loose steam trading on Monday at 33.130 (-0.33%).

* Rates are as of Thai time 10.56 AM.

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