The Thai baht is heading towards its FIFTH weekly loss on Friday as confidence in the country's tourism-reliant economy has waned amid a rapidly spreading Delta variant of coronavirus in Asia and abroad that has clouded global growth outlook.
The baht, Asia's worst performing currency this year, dropped 0.7% to 32.68 per dollar following Prime Minister Prayuth Chan-ocha's decision on imposing more travel restrictions.
The baht last traded at this level during the original COVID-19 outbreak in April 2020.
'The baht's Achilles heel is decimated tourism,' HSBC analysts said in a note, expecting it to weaken further amid slow recovery as they lowered their year-end projection for the currency by about 7% to 33.0 per dollar.
Investor sentiment had also taken a hit since the Bank of Thailand slashed its growth forecast for the economy last month, predicting it would return to pre-pandemic levels only by 2023.
Asia's emerging markets already faced pressure from recent devastating outbreaks and a slow pace of vaccination, but a jump in COVID-19 cases in developed economies has stoked worries of more lockdowns that could hinder global trade.
'Broad risk aversion was even more apparent in the foreign exchange space with U.S. dollar on the rise… regional (Asian) currencies took the brunt because of worsening COVID outbreaks here,' Maybank analysts said in a note.
'The trigger could be the state of emergency declared for Tokyo on Thursday, underscoring the challenges of overcoming the Delta variant.'