Bloomberg News

Thai Baht Falls as U.S. Data Dims Export Outlook; Bonds Advance

September 04, 2012

Thailand’s baht declined, snapping a three-day gain, after a report showed manufacturing shrank in the U.S., the Southeast Asian nation’s third-largest export market. Government bonds rose.

The currency retreated from a three-month high and the MSCI (MXAP) Asia Pacific Index fell for a fifth day after data released yesterday by the Institute for Supply Management showed output in the world’s largest economy shrank for a third month in August. Global funds poured $33 million into Thai equities and $540 million into government debt in the first two days of this week, according to official figures, amid speculation the European Central Bank is preparing to unveil a debt-purchase plan. The U.S. will release employment data on Sept. 7.

“The weak U.S. data is used as an excuse for position adjustment from the recent declines in the dollar before big events like ECB and jobs data in the U.S.,” said Shigehisa Shiroki, chief trader on the Asian and emerging-markets team at Mizuho Corporate Bank Ltd. in Tokyo. “Declines in the baht will be limited due to fund inflows.”

The baht slumped 0.1 percent to 31.24 per dollar as of 8:35 a.m. in Bangkok, according to data compiled by Bloomberg. It touched 31.15 yesterday, the strongest level since May 11. One- month implied volatility, a measure of exchange-rate swings used to price options, was little changed at 4.27 percent.

The U.S. bought about 10 percent of goods shipped from Thailand in the first seven months of this year. Overseas sales, which account for about two-thirds of the Thai economy, decreased 3.9 percent in July from a year earlier after a 2.4 percent drop in June, according to central bank data.

The yield on the 3.25 percent bonds due June 2017 declined one basis point, or 0.01 percentage point, to 3.17 percent, according to data compiled by Bloomberg.

The Bank of Thailand may keep its benchmark interest rate unchanged at 3 percent today, according to 18 of 21 economists surveyed by Bloomberg. Three predicted a quarter percentage point reduction.

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

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


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