Thai baht plunges to 6-year low on capital market outflow and dollar strength

The Thai baht fell to a six-year low on Thursday as continued slump in equities and broad strength in the US dollar weighed on the local unit.

USD/THB jumped to 34.23, its highest since mid-2009, from the previous close of 34.19. The baht has fallen 1.2% so far this month and is headed for its fifth straight month of losses.

This month's outflow by foreign investors from Thai stocks and bonds was worth $199mn , taking total outflows for 2015 to $1.2 billion, Bloomberg data showed.

At 10:35 GMT, the benchmark SET Index of local shares was down 0.4% at 1,480.80.

Analysts say the weak economic outlook for China also weighs on Thailand as the East Asian country earns 11% of its exports from shipments to the world's second-largest economy.

Chinese stocks have witnessed a sharp selloff since June. The Shanghai Composite index lost ground at a 7-year high of above 5,000 in June and was down more than 30% at this month's low near 3,300 before a rebound to the 3800 region.

In addition to the regional factors, a broadly strong greenback also dragged the Thai currency lower. The euro fell and dollar rallied on Fed chair Janet Yellen's remarks on Wednesday.

Yellen said in her Congress testimony that the US central bank is still likely to raise rates this year. Consumer spending will boost recovery, she said, while adding that Greece and China top the list of uncertainties.

EUR/USD fell to 1.0910 on Thursday, its lowest since 1 June, meaning a 0.9% decline in the single currency on the Yellen remarks. The USD index, meanwhile, strengthened to 97.50 on Thursday, its highest since 2 June.

Technically, USD/THB has comfortably broken the 34.0 resistance and the level to watch out for is 34.56-61.

A move beyond that will open doors to 36.40, the 2009 high, whose breach could take the baht toward an 8-year low.

The immediate support for the pair is this month's low of 33.69 and then comes 33.15.

As long as the 33.0 zone holds, upside chances are higher for the pair. A break of that level on the downside will open doors to 32.27, this year's lowest hit in February.