Baht Set for Weekly Decline as Foreigners Trim Asset Holdings

Thailand’s baht was set for a third weekly loss and government bonds fell as foreigners cut holdings of the nation’s assets on concern political protests against a government-backed amnesty bill will hurt the economy.

Global funds pulled a net $895 million from Thai bonds and equities this week through yesterday, official data show. Prime Minister Yingluck Shinawatra has struggled to contain protests against the bill that would provide amnesty for political offenses in the years after a 2006 coup, and allow her exiled brother Thaksin to return. Data this month showed U.S. manufacturing was higher than estimated in October and employers added more jobs, supporting the dollar.

“The protests have lasted quite some time already and that encouraged fund outflows, weighing on the baht and Thai assets,” said Tsutomu Soma, manager of the fixed-income business unit at Rakuten Securities Inc. in Tokyo. “We’ve seen a recovery in the U.S., and then it’s better to put money there rather than in a country which has political risk.”

The baht weakened 0.4 percent this week to 31.590 per dollar as of 9:52 a.m. in Bangkok, according to data compiled by Bloomberg. The currency, which was little changed today, reached 31.705 on Nov. 11, the weakest level since Sept. 18.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, increased two basis points from Nov. 8 to 5.89 percent. The gauge dropped 11 basis points, or 0.11 percentage point, today.

Political Crisis

Although the Thai Senate rejected the amnesty bill on Nov. 11, concern that the lower house of parliament will reconsider the proposal has hurt investor confidence. Thaksin Shinawatra was ousted as prime minister in the 2006 coup and has guided policy from abroad since his sister, Yingluck, won elections in 2011. The current premier has tried to convince the public that the bill seeks to heal social divisions rather than help Thaksin return to recover part of a fortune that was seized after he fled a jail term in 2008.

Thailand’s gross domestic product expanded 3 percent in the third quarter, compared with 2.8 percent in the previous three months, according to the median estimate of economists surveyed by Bloomberg before official data Nov. 18.

The yield on the 3.625 percent sovereign bonds due June 2023 increased six basis points this week to 4.04 percent, data compiled by Bloomberg show. The rate declined two basis points today.

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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