· Thai baht headed for worst month in 2 decades, S.Korean won leads Asian FX lower
The Thai baht hovered around its weakest level in more than four years on Thursday and was headed for its worst month since July 2000 as the U.S. dollar gained on Fed
tapering expectations.
The baht, the region's worst performing currency in
2021 with an over 11% drop, was at its weakest since July 2017, while the greenback was near a one-year on worries that the Federal Reserve could start hiking interest rates in 2022.
The index of emerging Asian currencies was on track for its worst month since March 2020. In emerging Asia,the South Korean won led regional currencies lower, weakening up to 0.6% against the greenback.
The Bank of Thailand on Wednesday left its policy rate
unchanged and signalled no reduction despite the tourism-reliant economy being hammered by a COVID-19 outbreak earlier this year, a move that analysts said would help catch the baht's tumble.
"Market expectations for rate cuts will stay subdued ahead,
meaning that the bottom in THB rates is likely behind us, "
Duncan Tan and Philip Wee, analysts at DBS wrote in a note.
"Long-term THB rates are rising quite quickly and appears to be at odds with Thailand's weaker recovery prospects. With the upcoming large FY22 issuance program for loan bonds, upward pressures on long-term THB rates are likely to intensify ahead."
The country's central bank chief told a symposium on
Thursday that Thailand's economy remains fragile and has limited capacity to withstand shocks amid a severe COVID-19 outbreak.
· China's yuan rebounds from 1-month low, set for marginal monthly loss
· Dollar near 1-year high as Fed tightening in focus, Aussie climbs
The greenback hovered near a one-year high versus major peers on Thursday as expectations mounted that the Federal Reserve will taper stimulus from November, while the commodity-linked Aussie dollar benefited from a bounce in iron ore prices.
The safe-haven dollar has made sharp gains over the last two sessions on concern the Fed could withdraw economic support as global growth slows and high inflation is high. Spiking bond yields added to the currency’s firmness.
Its rise is despite an impasse in Washington over the U.S. debt ceiling that threatens to plunge the government into a shutdown.
The dollar index - which measures the currency against a basket of six rivals - stood at 94.327, little changed from Wednesday, when it hit 94.435 for the first time since late September last year.
Yields on the benchmark 10-year Treasury note stood at 1.5341%, holding near a mid-June high reached Tuesday at 1.5670%.
The dollar bought 111.97 yen, little changed from Wednesday, when it reached 112.05 for the first time since February 2020. It was on track for its worst monthly performance since March.
The euro was mostly flat at $1.15995, holding near Wednesday’s 14-month low of $1.15895
Sterling edged up 0.1% to $1.34357 but remained near the nine-month low of $1.3412 reached overnight on concerns about soaring natural gas prices and almost a week of petrol shortages in Britain.
A slight improvement in overall risk sentiment after days of gloom was seen in the cryptocurrency markets, as bitcoin rose 5% to $43,567 and ether bounced 6.4% to $3,034.09.
Both coins are down between 20%-27% from their September peaks.
Reference: Reuters
Thai
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