Thai Baht, Bonds Headed for Weekly Declines on Political Concern

Thailand’s baht headed for a fourth weekly loss and sovereign bonds dropped amid concern political unrest will further damp economic growth.

The currency fell to a two-month low and 10-year yields reached the highest level since September on speculation the Federal Reserve is moving closer to reducing stimulus that’s spurred inflows to emerging markets. Thailand’s Constitutional Court ruled this week against the government’s attempt to establish a fully elected Senate. The opposition plans to hold a protest this weekend, Suthep Thaugsuban, a former deputy prime minister of the Democrat Party, said yesterday.

“Sentiment for the baht and Thai assets is weak due to the political uncertainty,” said Koji Fukaya, chief executive officer and currency strategist at FPG Securities Co. in Tokyo. “Speculation Fed tapering will come sooner rather than later is negative for emerging markets.”

The baht depreciated 0.7 percent from a week ago to 31.82 per dollar as of 9:21 a.m. in Bangkok, according to data compiled by Bloomberg. The currency, which was little changed today, touched 31.85 earlier, the weakest level since Sept. 17.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, fell four basis points, or 0.04 percentage point, this week and today to 5.83 percent.

Thailand’s National Anti-Corruption Commission will set up a committee to investigate petitions to remove House speaker Somsak Kiatsuranont and Senate speaker Nikom Wairatpanij, NACC member Prasart Pongsivapai said yesterday. The government cut its 2013 expansion forecast on Nov. 18 to 3 percent from a range of 3.8 percent to 4.3 percent projected in August.

The U.S. central bank’s $85 billion of monthly bond purchases might be reduced as the world’s largest economy improves, minutes of the policy-setting Federal Open Market Committee’s Oct. 29-30 meeting showed this week.

The yield on Thailand’s 3.625 percent bonds due June 2023 climbed 17 basis points from Nov. 15 to a two-month high of 4.22 percent, data compiled by Bloomberg show. The rate was unchanged 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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