Bloomberg News

Baht Drops to Weakest Level Since August 2010; Bonds Steady

December 28, 2011

Dec. 28 (Bloomberg) -- Thailand’s baht dropped to its weakest level since August 2010 after global investors reduced holdings of the nation’s assets on concern Southeast Asia’s second-biggest economy is slowing.

The currency has declined 5 percent this year, its biggest annual loss since 2005, as exchange data show that international investors sold $195 million more local shares than they bought through yesterday. Official data showed last week that Thai exports shrank 12.4 percent in November from a year earlier, the first contraction since 2009, as the worst floods in 70 years disrupted manufacturing.

“There is a clear lack of investor interest in the currency,” said Nizam Idris, a currency strategist at Macquarie Group Ltd. in Singapore. Still, “the reconstruction and a recovery next year could see the baht doing better than most other regional currencies.”

The baht weakened 0.4 percent to 31.56 per dollar in Bangkok, according to data compiled by Bloomberg. The currency touched 31.61, the weakest level since August 2010.

The cabinet rejected a proposal to change the way the central bank sets inflation targets, Finance Minister Thirachai Phuvanatnaranubala said yesterday. The central bank, which uses core price pressures to guide monetary policy, had planned to switch to monitoring headline inflation.

The yield on the government’s 3.25 percent bonds due June 2017 was little changed at 3.13 percent, according to data compiled by Bloomberg.

The one-year onshore interest-rate swap, the fixed cost needed to receive a floating payment, fell four basis points, or 0.04 percentage point, to 2.87 percent.

--Editors: Ven Ram, Sandy Hendry

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

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


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