Faced with persistent deflation and a six-month contraction in exports, Thailand's central bank kept its benchmark interest rate unchanged at 1.5% on Aug. 5.
For an explanation, look no further than the sharp decline of the baht. It has slipped 9% against the dollar since mid-April, with most of the decline taking place in July. The baht emerged as Asia's second-worst-performing currency last month after the South Korean won and is now trading close to a six-year low.
A toxic combination of mounting concerns about China's economy and financial markets, growing expectations of a hike in US interest rates in September, a sharp sell-off in commodity markets, and a significant deterioration in economic conditions across emerging Asia is weighing heavily on the region's currency markets.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region's 10 major currencies, has fallen 3% since the end of April and currently stands at a five-year low.
The Indonesian rupiah, which fell 1.5% in July to take its decline against the dollar this year to 9%, is at its weakest level since the 1997-98 Asian financial crisis.
Read the full story here.