Bloomberg News

Baht Posts Monthly Drop After Global Funds Trim Share Holdings

November 30, 2011

Nov. 30 (Bloomberg) -- Thailand’s baht completed a monthly decline after global funds reduced holdings of the nation’s shares on concern the worst floods in 70 years will crimp factory output and damp exports.

International investors sold $431 million more Thai equities than they bought this month through yesterday, according to exchange data. The Bank of Thailand cut the one-day bond repurchase rate by a quarter of a percentage point to 3.25 percent as predicted by nine of 17 economists in a Bloomberg survey, its first rate reduction in more than two years. The rest forecast a 50 basis-point cut.

“Fund outflows are weighing on the baht,” said Disawat Tiaowvanich, a foreign-exchange trader at Bangkok Bank Pcl. “People also expect the central bank to cut rates. Exporters couldn’t produce and export goods, and so they are also unwinding their hedging positions, boosting dollar demand.”

The baht slumped 1.4 percent this month to 31.18 per dollar as of 3:22 p.m. in Bangkok, according to data compiled by Bloomberg. It advanced 0.2 percent today. The currency touched 31.45 on Nov. 28, the weakest level since August 2010.

The baht’s gain today was underpinned by fund inflows from overseas reinsurers honoring claims by local underwriters on the recent floods, according to Disawat. Fund inflows linked to insurance claims may affect the baht, Bank of Thailand Assistant Governor Pongpen Ruengvirayudh said on Nov. 14.

The yield on the nation’s five-year generic bonds rose 15 basis points, or 0.15 percentage point, this month through yesterday to 3.27 percent, according to data compiled by Bloomberg.

--Editors: Ven Ram, Andrew Janes

To contact the reporter on this story: Yumi Teso in Bangkok at

To contact the editor responsible for this story: Sandy Hendry at

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