The currency touched the weakest level since March 2010, adding to the worst annual loss in 13 years, before a meeting today between the Election Commission and members of the ruling and opposition parties to find ways to ease tensions that have gripped the country since October.
Global funds pulled US$1.3 billion from Thai stocks last month, exchange data show. The central bank will review policy on Jan 22 after official figures showed exports contracted for a third month in November.
"Portfolio flows will be affected given the ongoing political situation," said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd in Singapore. "The question is whether the central bank is going to make any moves to ease policy."
The baht retreated 0.1% to 32.895 per dollar from Dec 27 as of 9.32am in Bangkok, according to prices from regional banks compiled by Bloomberg. It touched 32.958 on Thursday, the weakest level since March 1, 2010, after losing 6.9 % last year in the biggest yearly drop since 2000.
One-month implied volatility, a measure of expected moves in the exchange rate used to price options, was little changed at 6.91%, according to data compiled by Bloomberg.
Consumer prices probably rose 1.6% in December from a year earlier, after increasing 1.9% the previous month, according to the median estimate of 17 economists in a Bloomberg survey before data due Thursday.
Overseas shipments declined 4.1% in November from a year earlier, according to a Dec 25 report. The Bank of Thailand cut its one-day bond repurchase rate by a quarter of a percentage point to 2.25% in November.
The anti-government protest group has not agreed to talk to the Election Commission at Thursday's meeting, Commissioner Somchai Srisuthiyakorn told reporters on Wednesday. The protesters have said they plan to shut down large parts of Bangkok starting Jan 13 to pressure the government to delay the Feb 2 general election and allow political reforms to take place.
The baht may pare declines once there is political clarity after the current deadlock is broken, according to a Dec 31 research note from Bank of Tokyo-Mitsubishi UFJ Ltd.
The yield on the 3.625% sovereign bonds due June 2023 was little changed at 3.93%, according to data compiled by Bloomberg.