The baht yesterday slipped beyond the 36-mark against the US dollar to hit a six-and-a-half-year low, tracking retreats of other regional currencies as investors bet the US Federal Reserve will lift its near-zero interest rates this month.

The Thai currency sank to its lowest level since March 2009 to 36.11/36.13 from 35.84/35.86 last Friday.
The baht has fallen by nearly 3% in the past month and almost 10% this year.

Malaysia’s ringgit dropped to a new low. It weakened 1.7% to 4.33 to the dollar in Kuala Lumpur after earlier falling to 4.3405, the lowest level since January 1998, when it reached a record 4.885. The ringgit has plunged 21.8% this year. Indonesia’s rupiah fell the most in two weeks to 14,246 to the dollar. It has lost 13% this year in Asia’s worst performance after the ringgit, according to Bloomberg.

The dollar also strengthened versus the South Korean won, the yen, the yuan, the Singapore dollar and the Philippine peso. Fed policymakers will meet in the middle of this month to decide whether to raise interest rates for the first time in nearly 10 years. Investors have been predicting a US rate hike as early as this month, but growing concerns over China’s cooling economy could delay the Fed’s decision.

Bank of Thailand spokesman Chirathep Senivongs Na Ayudhya said the baht’s depreciation was in line with the weakening trend of other regional currencies, as financial markets expect the Fed could begin normalising its funds rate this month following mixed jobs data detailing how the US unemployment rate has declined to 5.1% and hourly wages have increased on average.

A foreign exchange dealer at Bangkok Bank said the baht’s weakness followed the trend of other weakening currencies in Asia such as the ringgit, rupiah and won. The looming rate hike by the Fed on the back of lower US unemployment and improved wages coupled with uncertainty about China’s economic slowdown inducing downward pressure on regional currencies and prompting an increase in US dollar purchases are seen as factors causing the baht to depreciate, the dealer said.

The domestic political development of the National Reform Council voting to reject the draft charter is not considered a main factor influencing the weaker baht since other regional currencies have also depreciated following external developments.

The baht could sink to 36.50 by year-end due mainly to external economic factors in China and the US, the dealer added. Kasikornbank earlier said the baht was expected to weaken to 36.25 against the greenback by year-end.

Source：Bangkok Post