Bloomberg News

Baht Halts 8-Day Drop as Germany GDP Growth Beats Estimate

May 15, 2012

Thailand’s baht halted an eight-day decline as Germany’s economy growth beat estimates, easing concern that Europe’s debt crisis is deteriorating and weighing on global growth. Bonds fell.

Gross domestic product in Europe’s largest economy rose 0.5 percent from the fourth quarter, compared with a 0.1 percent forecast in a Bloomberg News survey, figures showed today. The baht earlier dropped to a three-month low as investors sought the relative safety of the dollar amid concern that Greece will exit the euro. Greek President Karolos Papoulias will try to persuade party leaders today to accept his proposal for a unity government after an inconclusive May 6 election.

“Given the sell-off in previous sessions, there could be some rebound in risk assets should we hear any tiny bit of progress in the European debt issue,” Frances Cheung, a strategist at Credit Agricole CIB in Hong Kong, said in an e- mailed response to questions by Bloomberg. “However, I doubt any rally can be sustained.”

The baht advanced 0.1 percent to 31.33 per dollar as of 3:51 p.m. in Bangkok, according to data compiled by Bloomberg. It touched 31.40 earlier, the weakest level since Jan. 26. One- month implied volatility, a measure of foreign-exchange swings used to price options, was little changed at 4.52 percent.

Global funds trimmed ownership of Thailand’s stocks by $179 million this month through yesterday, according to data from the stock exchange.

The yield on Thailand’s 3.65 percent bonds due December 2021 rose two basis points, or 0.02 percentage point, to 3.83 percent, according to data compiled by Bloomberg.

To contact the reporter on this story: Jiyeun Lee in Seoul at jlee1029@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net.


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