Thai Baht Weakens Toward 2009 Low as Central Bank Holds Key Rate

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Thailand’s baht fell toward a six-year low as global funds sold the nation’s assets and the central bank left borrowing costs unchanged ahead of a possible increase in U.S. interest rates.

The Bank of Thailand kept its one-day bond repurchase rate at 1.5 percent Wednesday, a decision predicted by 21 of 23 economists in a Bloomberg survey. Global funds have pulled a net $157 million from stocks and bonds this week as the finance ministry cut its 2015 economic growth forecast to 3 percent on July 28 from an earlier estimate of 3.7 percent. Exports have contracted for six straight months.

“A slowing economy and an expected rise in U.S. rates will put pressure on fund flows and the baht,” said Amonthep Chawla, head of research at CIMB Thai Bank Pcl in Bangkok. “The central bank may want to reserve its last ammunition for growth stimulus when the economic slowdown worsens.”

The baht dropped 0.4 percent to 35.157 a dollar as of 4:30 p.m. in Bangkok, data compiled by Bloomberg show. It fell to 35.180 earlier, near a 2009 low of 35.28 reached last week. The currency has weakened 3.9 percent in the past month in Asia’s second-worst performance.

A gauge of dollar strength climbed to its highest level since March. Federal Reserve Bank of Atlanta President Dennis Lockhart, who votes on the Federal Open Market Committee this year, said in a Wall Street Journal report that it would take significant deterioration in U.S. economic data to convince him to put off increasing rates in September.