Bloomberg News

Baht Rises After Greece Scraps Referendum; Floods Still a Risk

November 04, 2011

Nov. 4 (Bloomberg) -- Thailand’s baht advanced after Greece scrapped plans for a referendum that put its bailout in jeopardy, boosting demand for higher-yielding emerging-market assets.

The MSCI Asia-Pacific Index of shares rose for the first time this week after Greek Finance Minister Evangelos Venizelos said yesterday the country won’t hold a referendum on a bailout package agreed last week with euro region leaders. The prospect of a vote prompted the European Union to halt aid, pushing Greece toward a default. The baht completed a weekly decline amid concern the nation’s worst floods in almost 70 years will slow exports and economic growth.

“The baht’s daily move is influenced mainly by news from Europe with risk appetite slightly improving today on Greece,” said Kozo Hasegawa, a trader at Sumitomo Mitsui Banking Corp. in Bangkok. “Trading has been thin as companies have been on the sidelines due to the floods. The disaster will not only hurt production and exports, but also affect tourism.”

The baht climbed 0.5 percent to 30.63 per dollar as of 3:13 p.m. in Bangkok, according to data compiled by Bloomberg. It touched 30.60 earlier, the strongest level since Oct. 31. The currency dropped 0.3 percent from a week ago. The baht may trade between 30.50 and 30.90 next week, Hasegawa said.

The Bank of Thailand lowered its growth forecast for this year on Oct. 28 to 2.6 percent from a previous prediction of 4.1 percent. Domestic consumption should recover as early as the first quarter of 2012 and investment should begin to recover in the second quarter following the floods, central bank Governor Prasarn Trairatvorakul said yesterday.

The yield on the 5.25 percent debt due May 2014 slid two basis points today, or 0.02 percentage point, and four basis points this week to 3.17 percent, according to data compiled by Bloomberg.

--Editor: Sandy Hendry

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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