The baht, Asia’s worst-performing currency of the past month, sank to its weakest level since September 2009 as global funds reduced holdings of the nation’s bonds.
Overseas investors sold a net $82 million of local notes on Monday, a fourth straight day of outflows, data compiled by Bloomberg show. They have withdrawn $786 million since the Bank of Thailand unexpectedly lowered benchmark interest rates on April 29.
“Some foreign investors are probably reducing their positions on Thai bonds on concern about the baht’s quick decline,” Kobsidthi Silpachai, head of capital markets research at Kasikornbank, said by phone from Bangkok. “The central bank’s interest-rate cut and the dollar’s strong outlook have also added to the baht’s weakness.”
The baht fell 0.2% to 33.759 a dollar as of 9.43am in Bangkok, data compiled by Bloomberg show. The currency has lost 3.6% in the past month. A gauge of dollar strength climbed 0.4% on Monday as investors bet the Federal Reserve remains on track to raise interest rates this year while global peers retain unprecedented easing.
Thailand’s central bank last month cut its one-day bond repurchase rate for a second straight meeting, reducing it by a quarter of a percentage point to 1.5%. The move came after the Finance Ministry lowered its economic growth forecast for this year. Only two economists surveyed by Bloomberg predicted the decision, while 18 forecast the rate would be kept unchanged.
Ten-year sovereign bonds fell for the first time in three days, pushing the yield up six basis points, or 0.06 percentage point, to 2.84%. The one-year interest-rate swap was steady at 1.46%.