Bloomberg News

Baht Completes Biggest Monthly Drop Since 2001 on Fund Outflows

September 30, 2011

Sept. 30 (Bloomberg) -- Thailand’s baht had its biggest monthly drop in a decade after global funds reduced holdings of the nation’s assets on concern Europe’s debt crisis will sap demand for Asian exports.

International investors sold $612 million more Thai equities and $61 million more government debt than they bought this month through yesterday, according to data from the stock exchange and the Thai Bond Market Association. The baht touched a one-year low yesterday after the finance ministry cut this week its economic growth forecast for 2011 to as much as 4.3 percent from a June estimate of 5 percent.

“Asia’s currencies are under pressure because of fund outflows as investors have been risk averse due mainly to the European debt crisis,” said Kozo Hasegawa, a trader at Sumitomo Mitsui Banking Corp. in Bangkok. “Concern about the local economy is also growing as exports are likely to slow. Sentiment may not recover anytime soon.”

The baht slumped 3.8 percent in September, the most since March 2001, to 31.13 per dollar as of 3:04 p.m. in Bangkok, according to data compiled by Bloomberg. The currency, which gained 0.1 percent today, is 1.3 percent lower this quarter. It may trade between 31.05 and 31.35 next week, Hasegawa said.

The Southeast Asian nation had current-account deficit for the first time in three months in August, the Bank of Thailand said in a statement today. The shortfall was $697 million, compared with a revised $3.44 billion surplus in July. The current account is the broadest measure of trade, tracking goods, services and investment income.

Government bonds declined this month. The yield on the 5.25 percent notes due May 2014 rose 14 basis points, or 0.14 percentage point, to 3.52 percent, according to data compiled by Bloomberg. The rate, which fell three basis points today, dropped 21 basis points during the quarter.

--Editors: Ven Ram, James Regan

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

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net


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