Bloomberg News

Baht Drops on Concern Slowing Global Economy Will Sap Exports

September 28, 2011

Sept. 28 (Bloomberg) -- Thailand’s baht fell on concern a slowing U.S. recovery and Europe’s debt crisis will damp demand for exports from Southeast Asia’s second-biggest economy.

The finance ministry cut its growth forecast for this year to a maximum 4.3 percent from a June estimate of up to 5 percent, it said today. The currency gained 0.2 percent earlier after stock exchange and the Thai Bond Market Association data showed global funds bought $19 million more Thai stocks and $40 million more government bonds than they sold yesterday.

“The weaker trend for the emerging markets is lingering,” said Shigehisa Shiroki, chief trader on the Asian and emerging- markets team at Mizuho Corporate Bank Ltd. in Tokyo. “There is no fundamental solution to Europe’s debt crisis.”

The baht dropped 0.4 percent to 31.01 per dollar as of 3:08 p.m. in Bangkok, according to data compiled by Bloomberg. It touched 31.22 yesterday, its weakest level since Sept. 8, 2010. The currency has declined 3.4 percent in September and 0.9 percent this quarter.

The baht may average 30.50 per dollar this year and 30 per dollar next year, said Boonchai Charassaengsomboon, director of the finance ministry’s macroeconomic policy bureau.

Government data released Sept. 22 showed growth in overseas shipments slowed to 31 percent in August from a year earlier after having increased 38 percent in July. Overseas sales account for about two-thirds of the economy.

Government bonds gained. The yield on the 5.25 percent notes due May 2014 fell one basis point, or 0.01 percentage point, to 3.54 percent, according to data compiled by Bloomberg.

--Editors: Ven Ram, Simon Harvey

To contact the reporter on this story: Yumi Teso in Bangkok at yteso1@bloomberg.net

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net


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