Bloomberg News

Thai Baht Drops for Second Week, Bonds Decline on Fund Outflows

May 11, 2012

Thailand’s baht completed this year’s biggest weekly drop and government bonds fell after overseas investors cut holdings of local assets on concern Europe’s debt crisis will hurt demand for Asian exports.

Global funds sold $224 million more local shares than they bought this week through yesterday and pared ownership of sovereign debt by $262 million, data from the stock exchange and the Thai Bond Market Association show. The baht touched a three- month low as Greece’s leaders entered a fifth day of talks to form a government following elections on May 6. This week’s 3.9 percent drop in gold prices is also weighing on the currency, according to Kasikornbank Pcl. (KBANK)

“A major factor is the Greek political situation and that is why investors aren’t putting the money in this region,” said Amonthep Chawla, an analyst in Bangkok at Kasikornbank. “And with gold prices having gone down this week, we have been seeing flows to buy dollars from importers.”

The baht retreated 0.8 percent this week and 0.3 percent today to 31.22 per dollar as of 3:07 p.m. in Bangkok, according to data compiled by Bloomberg. The currency reached 31.25 earlier, the weakest level since Jan. 27.

One-month implied volatility, a measure of foreign-exchange swings used to price options, was unchanged this week and today at 4.52 percent.

The Bank of Thailand raised the nation’s 2012 economic- growth forecast to 6 percent today from a March prediction of 5.7 percent. That compares with an expansion of 0.1 percent last year.

The yield on the government’s 3.25 percent bonds due June 2017 rose seven basis points, or 0.07 percentage point, to 3.64 percent this week, according to data compiled by Bloomberg. It was little changed today.

To contact the reporter on this story: Yumi Teso in Bangkok at yteso1@bloomberg.net

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


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