Thai baht hits 1-year low at 33.09 per US dollar ahead of BOT decision
Why it matters: Traders expect the Federal Reserve to widen its rate lead as Thailand's central bank is seen holding at 1%.
The Thai baht fell to a one-year low on Tuesday, weakening as much as 0.5% to 33.09 per US dollar before the Bank of Thailand's rate decision. Markets are betting the gap between US and Thai interest rates will widen, with US overnight indexed swaps pricing in a full quarter-point Federal Reserve increase by October while baht swaps imply just over a 40% chance of a 25-basis-point rise over the next six months. The Bank of Thailand is expected to keep its key rate at 1% on Wednesday after holding steady on April 29. Economists say Thailand faces pressure from high household debt, weaker domestic demand, a shrinking workforce and slower Chinese growth hitting tourism.