Baht Trades Near 2-Week Low as Growth Outlook Dims; Bonds Rise

Thailand’s baht traded near the lowest level in two weeks after foreign investors pulled money from local stocks following data showing exports fell for a third month in August. Bonds gained.

Offshore funds sold a net $196 million of Thai shares yesterday, the most since August 2011, exchange data show. The finance ministry cut its economic growth forecast for 2012 this week and Bank of Thailand Governor Prasarn Trairatvorakul said yesterday the contraction in overseas sales could hurt local consumption and investment. The baht has strengthened 1.1 percent this month and 2.4 percent this quarter.

“The central bank will probably want to slow the baht’s appreciation for competitive reasons,” said Kampon Adireksombat, an economist at Tisco Securities Co. in Bangkok. “But it’s clear they aren’t going to change the currency trend.”

The baht traded at 30.97 per dollar in Bangkok versus 30.99 yesterday, according to data compiled by Bloomberg. It touched 31.06 earlier, the weakest level since Sept. 14. The baht may fluctuate between 30.75 and 31.25 between now and the end of the year, Adireksombat forecast.

One-month implied volatility, a measure of exchange-rate swings used to price options, was steady at 4.27 percent.

Gross domestic product will increase 5.5 percent this year, compared with an earlier projection of 5.7 percent, the finance ministry said on Sept. 25. Exports fell 7 percent in August from a year earlier, the customs bureau said on the same day.

The yield on the government’s 3.65 percent bonds due December 2021 dropped for a third day, easing one basis point or 0.01 percentage point to 3.58 percent, according to data compiled by Bloomberg. That was the lowest since Sept. 10. The yield reached 3.71 percent on Sept. 17, the highest since May.

Baht-denominated government notes have returned 1.5 percent this year, according to an index compiled by HSBC Holdings Plc.

To contact the reporter on this story: David Yong in Singapore at dyong@bloomberg.net

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

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