The USD/THB exchange rate hit another fresh multi-year and intraday high of 34.265 baht per dollar and quoted at 34.185 baht per dollar, as of 16:04:46 GMT on Thursday. The Asian Development Bank said on Thursday that the bank cut its economic-growth forecast for Thailand to 3.2% from 3.6% forecasted in March, citing weak first-quarter growth, continued deterioration in the consumer confidence index, and the contraction of merchandise exports.

Thailand's Finance Minister Sommai Phasee said on Wednesday that the economy is expected to grow 2.6% in the second half of this year, a slower pace than the first half. Mr. Sommai didn’t say what the GDP for the first half of this year was. Exports are likely to contract for the third straight year, down 1.7% this year compared to a 0.2% rise forecasted by the ministry in April.

The Thai baht could be under selling pressure as Fed Chair Janet Yellen’s semiannual testimony in front of the U.S. House Financial Services Committee on Wednesday, made it very clear that the Fed is going to raise the rate between September and December this year. Since the Fed committee removed the key word "patient" from its March 18 statement, the 10-year U.S. Treasury yield has skyrocketed 21.61%, from 1.93% on that day, to 2.347% as of 16:23:51 GMT on Thursday. 

The 10-year Thailand Government bond yield printed at 2.86%, as of 13:01:50 GMT on Thursday. The yield spread between the U.S. 10-Year Treasury Note and the Thailand 10-Year Government bond, narrowed to 0.513%. Narrowing the bond yield spread and depreciating the Thai baht could spur capital outflows.

One may want to pay attention that during the months of January to June of this year, the average net sells for foreign investors of the SET was about 2.611 billion baht a month, according to the SET market data. Foreign investor selling has been accelerating in July as the net sells have already registered 17.644 billion baht month-to-date, almost seven times the monthly average net sells in the past six months. Foreign investors make up about 23% of the trading volume on the SET exchange.

The fact that the equity market is forward-looking and has traditionally been viewed as an indicator of the economy, a large pullback in the SET could be reflective of a future recession, or vice-versa. As the SET continues to slide downward while the Thai baht continues to weaken, the market may be signaling that a weaker baht will not improve Thai corporate revenues and profits.

Technically, the USD/THB broke out the ascending triangle at the end of April and the projected exchange rate is 35.20 baht per dollar. The currency pair has been also moving in a rising wedge chart pattern since mid-2013, which is beginning to break out. If the rising wedge breakout is confirmed, the projected exchange rate could be even higher.