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Dec. 29 (Bloomberg) -- Thailand’s baht fell to its weakest level since August 2010 after the government cut the economy’s growth forecast following the worst floods in almost seven decades.
Gross domestic product will rise 1.1 percent this year, compared with a November forecast of between 1.7 percent and 2 percent, Somchai Sujjapongse, head of the finance ministry’s fiscal-policy office, said in Bangkok yesterday. Stock indexes fell across Asia as a surge in the European Central Bank’s lending to euro-area banks highlighted the growing risks from the sovereign-debt crisis.
“The currency fell today along with other Asian currencies on Europe’s lingering debt problems,” said Frances Cheung, a senior strategist at Credit Agricole CIB in Hong Kong. “Although Thailand was badly hit by the floods, it also gives more room for it to grow in 2012.”
The baht weakened 0.7 percent to 31.76 per dollar in Bangkok, taking its drop for the year to 5.6 percent, according to data compiled by Bloomberg. The currency touched 31.77, the weakest level since Aug. 18, 2010.
The yield on the government’s 3.25 percent bonds due June 2017 was little changed at 3.17 percent, according to data compiled by Bloomberg. The one-year onshore interest-rate swap, the fixed cost needed to receive a floating payment, fell one basis point, or 0.01 percentage point, to 2.88 percent.
--With assistance from Kyoungwha Kim in Seoul; Editors: Ven Ram, Simon Harvey
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