The baht fell beyond 35 to the US dollar on Friday, an eight-year low, as slowing economic growth and the growing probability of a US interest-rate increase spurred outflows of funds.
The decline came as overseas investors sold a net US$180 million worth of Thai stocks and bonds in a week when the SET Index lost 2.7% from the previous Friday.
The benchmark share index closed at 1,438.08 points and is now down 4% since the start of the year.
The Bank of Thailand is closely monitoring the baht because a rapid descent may make it difficult for the economy to adjust, assistant governor Chantavarn Sucharitakul said on Thursday.
"Additional outflows of foreign funds will continue to put pressure on the baht," said Komsorn Prakobphol, an investment strategist at Tisco Financial Group. "The economy remains very weak, while most economic data point to robust growth in the US."
The Finance Ministry expects the economy to expand by 3% this year but faltering exports are leading many other forecasters to scale back their predictions further.
The baht fell as low as 35.03 to the dollar and was trading late Friday in Bangkok around 34.94, compared with 34.72/74 the day before and 34.14/16 a week earlier.
Regionally, Asian currencies extended the week’s loss as a gauge of Chinese manufacturing fell to a 15-month low, adding to concern that the region’s growth is slowing, Bloomberg reported on Friday.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the 10 most-active currencies excluding the yen, dropped to its lowest level since 2010 and posted a third weekly decline.
China’s data follows a July 23 report that showed expansion in South Korea decelerated in the three months through June for a fifth quarter. A slump in commodity prices also weighed on exchange rates of Asia’s raw-material exporters, just as the US prepares to raise borrowing costs.
“China is Asia’s largest economy and its slowdown has a spillover effect on the region’s outlook,” said Stella Lee, president of Success Wealth Management Ltd in Hong Kong. “A US rate hike looks set in stone, so that could trigger fund rotation from emerging markets to the U.S.”
Apart from the baht, which led losses in the region, the won declined 1.8% and the Taiwan dollar 0.7%.
In Malaysia, one-month ringgit forwards dropped for a fifth week, the longest stretch of 2015, amid falling oil prices that are eroding the nation’s export earnings. The spot rate was little changed from July 17 and is Asia’s worst-performing currency this year. A report Thursday showed foreign-exchange reserves decreased to the lowest in almost five years, suggesting the central bank intervened to stem the losses.
“The ringgit will continue to remain under pressure given the fall in oil prices and data showing a fall in reserves,” said Khoon Goh, a strategist at Australia & New Zealand Banking Group Ltd. in Singapore.
The Philippine peso dropped for a third week, falling 0.6%, and reached a five-year low against the dollar on Friday. Slowing inflation may give the central bank room to cut the amount of cash lenders must set aside as reserves, monetary board Member Felipe Medalla said on July 15.
Elsewhere this week, Indonesia’s rupiah declined 0.7% and touched the lowest level since the Asian financial crisis that roiled markets in 1997-98. India’s rupee was down 0.7% from July 17 in afternoon trading in Mumbai. China’s yuan and Vietnam’s dong were unchanged.