The baht is expected to slide further after falling below 36 to the US dollar on Tuesday as the Bank of Japan opted to hike the interest rate for the first time in 17 years, which failed to help Asian currencies.
The market expects the Federal Reserve to keep US rates unchanged on Thursday, which could strengthen the dollar, said Kasikorn Research Center (K-Research).
The Thai currency was quoted at 36.07 to the greenback Tuesday afternoon after slipping to a two-week low of 36.04 in early morning trade and closing on Monday at 35.98, said Kanjana Chockpisansin, head of the research, banking and financial sector at the think tank.
K-Research now predicts the baht to trade at 36.20-30 to the dollar later this week, she told the Bangkok Post.
The yen dipped Tuesday to below 150 to the dollar after the Bank of Japan raised its key interest rate from -0.1% to a range of 0%-0.1%, the first rise since 2007, following Japan's biggest companies agreeing last Friday to raise wages by 5.28% for 2024.
The hike means there are no countries with negative interest rates.
The central bank also abandoned its radical yield curve control policy for Japanese sovereign bonds and abolished the purchase of high-risk assets such as exchange-traded funds.
However, the regulator said it would keep buying long-term government bonds.
"The Bank of Japan's decision on rates is quite minimal and the market expected this kind of move, so it failed to improve the sentiment for other Asian countries," said Ms Kanjana.
"No additional measures are likely to be launched by the bank at its next meeting late next month."
The Fed is expected to keep the US interest rate unchanged on Thursday, which could make the dollar appreciate further against Asian currencies, according to K-Research.
"The market expects the Fed will delay the first rate cut of the year from June to the second half, with less than three reductions this year," she said.
"The baht could trade at around 36.30 to the dollar by the end of the week, but if the Fed upgrades the US economic growth forecast, hinting rate cuts may be delayed further, then the dollar could strengthen and pressure a deeper baht slide."