Bloomberg News

Baht Weakens as Fitch Says Europe Crisis a Threat to U.S. Banks

November 17, 2011

Nov. 17 (Bloomberg) -- The Thai baht fell toward a two-week low after Fitch Ratings said Europe’s debt crisis may pose a “serious risk” to U.S. banks, prompting investors to favor safer bets than emerging-market assets. Government bonds rose.

Global funds sold $79.6 million more Thai shares than they bought yesterday, taking net sales for the month to $165 million, exchange data show. Thailand’s floods may cost between 300 billion baht ($9.7 billion) and 400 billion baht, or 3 percent to 4 percent of gross domestic product, Barclays Capital said today in a report.

The baht depreciated 0.13 percent to 30.87 as of 10:09 a.m. in Bangkok, according to data compiled by Bloomberg. It reached 30.95 yesterday, the weakest level since Nov. 2.

“Generally, the direction of Asia’s currencies is led by whatever happens in Europe right now,” said Chow Penn Nee, an economist at United Overseas Bank Ltd. in Singapore. “We downgraded our forecast for Thailand’s economic growth. There are reports saying the floods could continue well into next year.”

Prime Minister Yingluck Shinawatra said Nov. 15 that eastern Bangkok should be flood-free by the end of the year, while western districts may take longer to drain. The floods have closed 891 factories in industrial estates that employed about 460,000 people, according to the Thai Industrial Estate and Strategic Partners Association.

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

--Editors: James Regan, Anil Varma

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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