Thai Baht, Bonds Drop as Investors Wait for Fed Stimulus Signal

Thailand’s baht fell to within 0.4 percent of a nine-month low and bonds dropped as investors wait for a signal from the Federal Reserve on the future of its stimulus program that has spurred fund flows to emerging markets.

Fed Chairman Ben S. Bernanke will speak to reporters at the end of the monetary authority’s two-day meeting today. Global investors have pulled $2.6 billion from Thai bonds and equities since May 22, when Bernanke said $85 billion a month of debt purchases could be reduced if there is a sustained improvement in the U.S. jobs market. The benchmark SET Index of shares lost 12 percent during the same period.

“Investors don’t want to take positions on risky assets at this moment,” said Pareena Phuangsiri, a Bangkok-based analyst at Kasikornbank Pcl. “Domestically, sentiment is not so good either with the SET Index falling. Foreign selling of bonds and stocks also weigh on the baht.”

The baht fell 0.5 percent to 31 per dollar as of 8:55 a.m. in Bangkok and touched 31.08 earlier, data compiled by Bloomberg show. It reached 31.19 on June 12, the weakest level since Sept. 7, and has lost 1.4 percent since June 14. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, rose six basis points, or 0.06 percentage point, to 7.9 percent.

The yield on the 3.625 percent government bonds due June 2023 climbed two basis points to 3.83 percent, according to data compiled by Bloomberg. Baht-denominated debt has declined 1.4 percent this month, less than a 3.3 percent drop for Indonesian notes and a 1.9 percent slide for the Philippines, indexes compiled by HSBC Holdings Plc show.

The government sees no need to implement measures to stem outflows, Somchai Sujjapongse, director-general of the finance ministry’s fiscal policy office, said on June 14, adding that money will eventually flow back.

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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