Thai stocks are likely to hold firm next week on strong expectations that the central bank will cut interest rates sharply to boost economic growth, dealers said Friday.
The Bank of Thailand's rate-setting committee meets April 11 and the market expects it to cut for the third time this year, bringing its benchmark interest rate down to 4.00 percent from the current 4.50 percent.
Easing inflation, which dropped for a fifth consecutive month in March, to 2.0 percent from February's 2.3 percent, has cleared the way for lower rates.
"Investors have firm expectations that the rate will be cut by 50 points to spur economic growth," said Chai Chiraseveenupraphan, market strategies analyst at Capital Nomura Securities.
"As well, the market expects additional fiscal policy measures to be announced by the government to further drive the slowing economy," he added.
The economy is forecast to expand in a range of 4.0-5.0 percent in 2007, compared to 5.0 percent last year. Chai also cautioned that later in the week, the market could struggle ahead of a long weekend due to security concerns during the Songkran water festival, which marks Thailand's Buddhist New Year.
The army-installed government earlier warned of possible attacks by southern separatists during the festival, when Thai markets will close from April 13 through 17.
Anti-coup protesters in Bangkok have also vowed to go ahead with a rally against Thailand's junta despite security warnings by the military rulers who seized power in a coup last September. Another national holiday Friday cut short the trading week. For the week to April 5, the Stock Exchange of Thailand composite index rose 18.7 points or 2.7 percent to 692.41. Chai said the market would likely trade between 675 and 695 points next week.