The currency fell the most since June on Thursday after Fed Chair Janet Yellen said interest rates may be increased about six months after the monetary authority ends its stimulus program later this year. The baht touched a three-month high on March 19, a day after Thailand’s cabinet approved ending the state of emergency that was imposed on Jan 22. The decree was lifted before it was set to expire on March 23.
"We have a mixed picture for the baht," said Paisarn Lertkowit, a currency trader at Bangkok Bank Pcl in the city. "The Fed comments should be dollar positive, but there was some easing concern among offshore investors about Thai politics that led to some baht demand."
The Thai currency fell 0.4% from a week ago, the biggest five-day decline since the period ended Feb 21, to 32.40 per US dollar as of 8.35am in Bangkok, according to data compiled by Bloomberg. The currency rose 0.2% Friday and touched a three-month high of 32.09 on March 19.
One-month implied volatility, a measure of expected moves in the exchange rate used to price options, dropped 19 basis points this week and seven basis points on Friday to 6.44%.
The Fed announced another $10 billion reduction of its monthly bond buying this week, to $55 billion, and said the purchases could end in the second half of this year.
Thailand's Constitution Court is to decide whether to annul the Feb 2 general election on Friday. Results of the vote have not been tallied because protesters blocked candidates from registering and people from voting in some parts of Bangkok and the country's southern provinces, leaving the government in a caretaker role.
A prolonged political deadlock in Thailand lasting into the second half of the year may prompt a reassessment of its rating outlook, Andrew Colquhoun, head of Asia-Pacific sovereign ratings at Fitch Ratings, said in an interview in Singapore on Thursday.
The yield on the 3.625% sovereign bonds due June 2023 rose nine basis points this week to 3.8%, data compiled by Bloomberg show. The yield increased two basis points, or 0.02 percentage point, on Friday.