Bloomberg News

Thai Baht Set for Worst Week of 2012 on Outflows; Bonds Rise

May 17, 2012

Thailand’s baht was set (SET) for its largest weekly slide since December as Europe’s debt crisis dims the outlook for exports and prompts investors to favor safer bets than emerging-market assets. Government bonds gained.

Global funds sold $212 million more of the nation’s debt than they bought this week through yesterday, according to data from the Thai Bond Market Association. Bank of Thailand Governor Prasarn Trairatvorakul said on May 16 investors are shifting funds to low-risk assets because of Europe’s debt problem. The benchmark SET Index of stocks fell 1.5 percent in the first four days of the week.

“Investors are pulling money out of Asia amid risk-off sentiment,” said Shigehisa Shiroki, chief trader on the Asian and emerging-markets team at Mizuho Corporate Bank Ltd. in Tokyo. “Weakening external demand is a negative factor as Thailand’s economy depends on exports, while a decline in stocks is also a concern.”

The baht slumped 0.9 percent this week and 0.1 percent today to 31.46 per dollar as of 8:36 a.m. in Bangkok, according to data compiled by Bloomberg. The currency touched 31.57 on May 16, the weakest level since January.

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

The yield on the government’s 3.25 percent debt due June 2017 declined 11 basis points, or 0.11 percentage point, to 3.53 percent this week, according to data compiled by Bloomberg. The rate slid three basis points today.

Thailand’s economy shrank 0.9 percent in the first quarter from a year earlier after contracting 9 percent in the previous three months, according to the median forecast of economists in a Bloomberg survey before a May 21 report. Exports, which are equivalent to about two-thirds of gross domestic product, climbed 6.5 percent in April after decreasing 6.5 percent in March, a separate poll showed before data next week.

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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