The Thai baht lost the most among subdued Asian currencies on Wednesday, as the dollar edged up in response to cautious remarks about further monetary easing by US Federal Reserve chief Jerome Powell.
The baht fell 0.3% to a one-week low of 31.95 per dollar. Data showed that Thailand’s exports in August grew by just 5.8%, their slowest pace in nearly a year, reflecting a stronger baht and the impact of tariffs from the United States.
The baht has been the region’s second-best performing currency this year with a gain of 7.4% against the dollar. Its rise to a four-year high earlier this month prompted the government to set up a team to address the appreciation and trace unidentified capital flows.
Lloyd Chan, a senior currency analyst with MUFG, expects the currency to trade in the range of 32.00 and 32.50 in the fourth quarter, due to Thailand’s strong external buffers and a broadly weaker dollar.
Other currencies in the region fell as the dollar index edged up 0.1%.
Mr Powell on Tuesday warned of persistent risks in the labour market and the challenge of stubborn inflation, while reiterating that policymakers face a difficult path in weighing further easing.
The Fed made its first interest rate cut of the year last week, and the markets are still pricing in two more reductions by year-end, but Mr Powell’s remarks called that forecast into question.
The Philippine peso fell 0.4% to a three-week low, and the South Korean won inched down 0.3%. The Indonesian rupiah weakened 0.1% to its lowest level since April 30.
Indonesia’s parliament on Tuesday approved President Prabowo Subianto’s budget proposal for 2026, which includes increased spending even as it aims to keep fiscal deficit below the legal limit.
Prabowo’s growth plans have sparked worries that fiscal credibility might be compromised, potentially leading to a weaker current account balance and higher inflation.
“In the near term, technical indicators continue to support a bearish bias on the rupiah,” said Mr Chan of MUFG. “With the dollar-rupiah rate breaching the 16,500 level and market sentiment remaining fragile, the pair could consolidate above our initial year-end forecast of 16,400 in the fourth quarter, unless there is a meaningful shift in policy clarity.”
The Indian rupee hovered near its record low on worries about the impact of US tariffs and possible shifts in visa policies, with intervention by the Reserve Bank of India providing some support.
President Donald Trump has threatened to apply a charge of $100,000 a year for H-1B visas in the United States, despite the protests of tech companies that they need talent from countries like India for their expanding workforces.
