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The Thai baht sank to a six-week low while most Asian currencies seesawed in a narrow range on Thursday, and regional equities edged lower as traders tempered US rate cut wagers and considered the possibility of a second Trump presidency.

The baht dropped as much as 1% to 33.80 per US dollar, its lowest since Sept. 10, resuming trading after a holiday and catching up with declines in other Asian currencies on prospects the Federal Reserve may not cut rates aggressively.

The Singapore dollar, Philippine peso, and the South Korean won all traded flat, last up 0.2% each.

Asian currencies: Ringgit, Thai baht at over 2-year highs

The US dollar index, which measures the greenback against six rivals, stood at 104.33 as of 0320 GMT, not far from the overnight high of 104.57, a level last seen on July 30.

A gauge for currencies has dipped 1.7% in October so far and is on track for its worst month since Feb. 2023.

Strong macroeconomic indicators and hawkish comments from Federal Reserve officials, combined with election prediction markets putting strong odds on Republican candidate Donald Trump winning the Nov. 5 election, have dampened expectations for monetary easing. Polls, however, show a tightly contested presidential race.

The dampened expectations on rate cuts have boosted the dollar and diminished the appeal of riskier Asian currencies.

In the short term, the baht and other Asian emerging market currencies may face pressure from the strengthening US dollar and rising 10-year US Treasury yield, likely persisting until the US election concludes, said Poon Panichpibool, a markets strategist at Krung Thai Bank.

Thailand’s economic growth may not reach 3% this year but should come in above that level next year as the government in Southeast Asia’s second-largest economy plans to accelerate investment, the finance minister said on Tuesday.

“Another factor that could contribute to THB’s volatility would be high correlation with gold price, and now gold price could move higher with quite a bit of volatility.”

In Indonesia, new President Prabowo Subianto officially swore in his cabinet on Monday, which included the reappointment of the country’s highly-regarded Finance Minister Sri Mulyani Indrawati.

“I still think there could be some upside for the rupiah even with some rate cuts going forward from the Bank of Indonesia. In the near-term, I think IDR could face the same pressure from strength in the US Dollar just like other EM FX,” Panichpibool said.

In Malaysia, annual inflation came in at 1.8% in September, slightly below expectations.

The Malaysian central bank remains the only one in Emerging Asia that analysts anticipate will maintain its policy stance through 2025.

“I believe BNM might eventually cut rates, especially if inflation meets or falls below the target, and the strong MYR rally could facilitate easing if necessary,” Panichpibool said.

Equities in Manila, Kuala Lumpur, and Shanghai retreated between 0.4% and 0.8%, respectively. Shares in Singapore and Bangkok, however, inched up 0.3% and 0.6% respectively.

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