Thai Baht Continues to Weaken to THB36.70 per Dollar, a 16-Year Low

Thai baht fell to a new 16-year low against the dollar during afternoon trading on expectations that the Federal Reserve would take a more hawkish move at its upcoming July meeting and raise a key policy rate by as much as 100 basis points.

Baht briefly hit THB36.70 per U.S. dollar on Friday, its lowest level since 2006, weakening from Thursday’s closing rate of THB36.51.

With the Federal Reserve expected to hike interest rates by 0.75 – 1 basis points at its meeting later this month, the baht has continued to fall in value.

The U.S. inflation accelerated at a faster-than-expected rate in June 2022, hitting 9.1% YoY and beating the estimate of 8.8% rise. Core inflation, which excludes food and energy prices, dropped to 5.9% YoY in June, but still higher than expectations of 5.7%.

Prior to the release of June inflation, analysts widely anticipated that the central bank was on pace to increase an interest rate by 75 basis points in July. However, after an acceleration of inflation in June, analysts were shifting toward a full-point rate hike instead.