Bloomberg News

Baht Touches Two-Week Low on Concern Europe Crisis Will Spread

November 16, 2011

Nov. 16 (Bloomberg) -- The Thai baht touched a two-week low on concern Europe’s debt crisis will spread and damp demand for emerging-market assets. Government bonds declined.

Most Asian currencies slid today after the extra yield investors demand to hold fixed-income securities from France, Belgium, Spain and Austria over German bunds climbed to euro-era records. The Bank of Thailand revised its 2011 economic growth forecast to 2.6 percent on Oct. 28 from 4.1 percent due to the nation’s worst floods in almost 70 years. Thailand’s government said yesterday floodwaters around Bangkok may take as long as two months to fully recede.

“We think Asian currencies including the baht will depreciate by the end of the year because of the euro-zone fiscal crisis,” said Dariusz Kowalczyk, a senior economist at Credit Agricole CIB in Hong Kong. “Risk aversion will dominate trading in the near term.”

The baht traded at 30.85 per dollar as of 3:29 p.m. in Bangkok, according to data compiled by Bloomberg. It reached 30.95 earlier, the weakest level since Nov. 2. Kowalczyk forecasts the currency will drop to 31.70 by year-end.

The yield on the 5.25 percent government bonds due May 2014 rose one basis point, or 0.01 percentage point, to 3.22 percent, according to data compiled by Bloomberg.

--Editors: Andrew Janes, Simon Harvey

To contact the reporter on this story: Andrea Wong in Taipei at awong268@bloomberg.net

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


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