BANGKOK, July 6 (Reuters) - Thailand's weakening baht is being driven down by external factors but the central bank is closely monitoring it, the finance minister said on Wednesday, as the currency trades against the dollar at its weakest level in more than five years.
The strengthening dollar and most recently the yuan are among the factors weighing on the baht, Arkhom Termpittayapaisith told reporters.
Despite some fund outflows following rising interest rates in other countries, there are no large outflows from the debt market, he said.
"Foreign investors are still confident in Thai bonds, while the capital market is performing in line with global markets," he said. "The central bank is closely monitoring the situation".
The baht was trading at 36.05 against the dollar at 0544 GMT, its weakest level since December 2016.
So far this year, foreigners have sold 7.8 billion baht ($216.43 million) of bonds but have bought 107.4 billion baht ($2.98 billion) worth of Thai shares, bourse and debt market data showed.
While headline inflation hit a near 14-year high, Arkhom said Thailand had a lower inflation rate than many countries and the government would offer more support measures to help ease living costs.
The government has yet to decide whether to extend a reduced diesel tax due to end later this month, he said.
With elevated inflation and a weak baht, the central bank is expected to hike its benchmark interest rate at its Aug. 10 meeting. ($1 = 36.04 baht) (Reporting by Kitiphong Thaichareon Writing by Orathai Sriring Editing by Ed Davies, Martin Petty)
