Bloomberg News

Baht Drops to Three-Week Low After Funds Reduce Share Holdings

June 24, 2012

Thailand’s baht declined to a three- week low after international investors cut holdings of the nation’s stocks. Government bonds were steady.

The baht retreated for a fourth day after exchange data showed global funds sold $140 million more Thai equities than they bought last week. The Bloomberg-JPMorgan Asia Dollar Index fell before European Union leaders hold a two-day summit in Belgium starting June 28 to discuss measures to resolve the region’s debt crisis.

“Foreigners have been net sellers in Thailand for quite some time and that put downward pressure on the baht,” said Disawat Tiaowvanich, a foreign-exchange trader at Bangkok Bank Pcl. “Sentiment remains weak until the EU summit. Dollar demand from importers seems to be more than baht demand from exporters.”

The baht lost 0.4 percent to 31.87 per dollar as of 8:31 a.m. in Bangkok, according to data compiled by Bloomberg. The currency touched 31.88 earlier, the weakest level since June 1. It may trade between 31.60 and 32 this week, Disawat said.

The currency’s one-month implied volatility, a measure of exchange-rate swings used to price options, climbed 99 basis points, or 0.99 percentage point, to 5.5 percent.

Thailand’s exports rose 0.5 percent in May from a year earlier after declining 3.67 percent in April, while imports climbed 9 percent following a 7.87 percent increase, according to the median forecasts of economists in Bloomberg News surveys before government data due at 1:30 p.m. local time.

The yield on the 3.25 percent bonds due June 2017 was unchanged at 3.34 percent, according to data compiled by Bloomberg.

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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