Bloomberg News

Baht Drops for Third Week as Floods Set to Slow Economic Growth

November 18, 2011

Nov. 18 (Bloomberg) -- Thailand’s baht had its third weekly decline as the worst floods in almost 70 years and Europe’s worsening debt crisis weaken the country’s growth outlook, sapping demand for its assets.

Foreign funds sold $194 million more Thai equities than they bought this month through Nov. 17, according to data exchange data. Floodwaters have swamped about 10,000 factories and stopped production at companies including Honda Motor Co. The damage from the disaster is estimated at 346.2 billion baht ($11.2 billion) and may curb 2011 economic growth by between 3.1 and 3.4 percentage points, the University of the Thai Chamber of Commerce said last week.

“The final quarter growth numbers are almost set to show contraction and that’s what the market is going to be looking for,” said Gundy Cahyadi, an economist at Oversea-Chinese Banking Corp. in Singapore. The region’s currencies including the baht are also “dominated by headline risk out of the euro zone,” he said.

The baht weakened 0.4 percent this week and today to 30.97 per dollar as of 4:18 p.m. in Bangkok, according to data compiled by Bloomberg. It touched 31.05 earlier, the lowest level since Oct. 21. Thailand’s benchmark SET Index of shares slid 0.5 percent today.

Thailand’s economic growth quickened to 4.5 percent in the three months through September from a year earlier after a 2.6 percent expansion the previous quarter, according to a Bloomberg survey of 11 economists before data due Nov. 21.

Italy’s benchmark 10-year debt yields rose above 7 percent this week, the threshold that led Greece, Portugal and Ireland to seek bailouts.

The yield on the 3.65 percent notes due December 2021 was little changed today at 3.40 percent, according to data compiled by Bloomberg. The rate fell six basis points, or 0.06 percentage point, this week. The one-year onshore interest-rate swap, the fixed cost needed to receive a floating payment, fell seven basis points to 2.74 percent today and nine basis points this week.

--With assistance from Andrea Wong in Taipei. Editor: Sandy Hendry

To contact the reporter on this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net;

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


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