Thai Baht Breaks Support Level at THB37 amid Strong Dollar and Outflows

Thai baht continued to weaken despite the recent policy rate hike by the Bank of Thailand to 2.50% from 2.25%, but still lower than other countries in the region, which causes a fund outflow to seek higher returns.

The baht currency reached an 11-month low on Tuesday after breaking the support level of 37 baht against the US dollar. The exchange is now THB 37.12 to one US dollar.

Despite the attempt from the Bank of Thailand to raise interest rate to 2.50%, it is still lower than other countries in the region as Malaysia stands at 3%, Vietnam at 9%, Myanmar at 7%, Indonesia at 5.75%, the Philippines at 6.25% and South Korea at 3.50%.

Moreover, the higher interest rates in some countries could not withstand the strength in US dollar as Indonesia rupiah and peso also weakened against the greenback that has an interest rate at 5.25-5.50%

The Dollar Index continued to maintain its 11-month high record on Tuesday at 107 amid expectations for a possibility that the US Federal Reserve could raise interest rates one last time this year to 5.75% and maintain at that level for longer.

Additionally, the U.S. 10-year yield rose to nearly its 15-year high on Monday, the level it just hit last week as investors were monitoring the Fed for a possibility of another rate hike.