Thailand’s baht declined for a 10th day, the longest losing streak since September 2011, and bonds gained on concern the economy’s outlook is deteriorating.

Consumer prices rose 1.48 percent last month from a year earlier, the slowest pace in a year, the Commerce Ministry reported yesterday. That compares with the median estimate of 1.6 percent in a Bloomberg survey. The finance ministry cut its 2014 economic growth forecast last week to 1.2-1.7 percent from a previous estimate of 2 percent.

?The baht declined 0.1 percent to 32.670 per dollar as of 3:53 p.m. in Bangkok, according to data compiled by Bloomberg.

Eoin Treacy's view

The Fed’s decision to stop purchasing additional Treasuries and mortgages last week has reinforced the relative strength of the US dollar, not least as other major central banks take a more aggressive stance towards monetary easing. The weakness of the Yen in particular represents a competitive devaluation from the perspective of many Asian countries and they have little choice but to allow their currencies to weaken in order to preserve their comparative position. 

The Asian Dollar Index has been largely rangebound since 2011 and is currently falling towards the lower boundary. Considering the fact that the Chinese Renminbi is relatively inert and the Hong Kong Dollar is pegged to the Dollar and that these represent half the Index, the recent weakness is better explained by some of the smaller weightings.  

The Indonesian Rupiah has been the region’s relative strength laggard and the Dollar continues to hold a progression of higher reaction lows within the almost 12-month range. A sustained move below IDR11,750 would be required to question medium-term scope for additional upside. 

At the other end of the scale the Korean Won has been among the strongest currencies in the region but the Dollar found support in the region of the 200-day MA last week and a sustained move below it would be required to question medium-term scope for additional upside. 

The Singapore Dollar has been among the most favoured currencies in the world over the last decade but the Dollar has returned to test the upper side of its two-year base and a clear downward dynamic would be required to question potential for a successful upward break.

If one clicks through the constituents of the Asia spot rates section of the Chart Library, a high degree of commonality is evident. Some clear evidence of deterioration would be required to question potential for the Dollar’s continued outperformance.