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Baht Falls Against the Dollar, Trading Below 37

The baht has fallen below 37 against the US dollar, hitting its lowest level in 16 years.

According to the Bank of Thailand, the weighted-average Interbank Exchange Rate was quoted at 37.011 at Friday afternoon’s close of business.

However, the latest Reuters report showed the baht trading around 36.86 in international markets on Saturday morning.

Meanwhile, US dollar demand remains intact driven by predictions of a major US Federal Reserve rate hike and increased Treasury yields.

The baht’s slide comes as several Asian currencies hit multi-year lows. On Friday, the Chinese yuan weakened and fell below the psychologically important 7-yuan-per-dollar exchange rate.

The South Korean won fell to its lowest level since 2009, while the Taiwanese dollar also hit a three-year low.

While the yuan has fallen below 7 to the dollar just twice since the 2008 financial crisis and has stoked fears of capital outflows from China, state media have published commentaries attempting to stabilize the market’s expectations by downplaying the level crossing’s importance.

According to the head of Asia research at ANZ, Khoon Goh, experts expect a very strong dollar environment that will be difficult to face.

Therefore, the People’s Bank of China will not try to rigorously defend any particular level. “It’s really all about managing the pace of the moves,” he added.

The won has been the worst-performing emerging market currency in Asia this year, falling 0.2% on its way to its sixth straight weekly decline against the dollar.

While South Korea’s currency authority has taken some steps to temporarily relieve the won, analysts warn that defending the currency’s levels is too costly and unlikely to be effective.

The Indonesian rupiah hit a more than six-week low while the Indian rupiah fell 0.2%. Malaysian markets remained closed for a holiday.

NatWest Markets emerging markets strategist Galvin Chia said Asia is likely to underperform “in aggregate” as long as the yuan remains weak. The currencies expected to have the most weakness are the won, the Taiwan dollar, and the Malaysian ringgit.

Asia’s stock markets were also weaker. Indonesia is on track to post its worst session in two months after hitting a record high on Thursday.

Shares in Taipei, Jakarta, Seoul, and Mumbai fell between 0.7% and 1.7%, while those in Shanghai fell more than 1.5% to a four-and-a-half-month low.