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Thai Baht Has Weekly Drop on Trade-Deficit Forecast; Bonds Fall

March 2 (Bloomberg) -- Thailand’s baht had its first weekly drop in more than a month on speculation businesses importing equipment to rebuild factories after last year’s floods will step up dollar purchases. Bonds fell.

The trade account will show a deficit for a fourth month in January, with the gap at $1.98 billion, according to the median forecast of economists in a Bloomberg survey before data due next week. The shortfall was $2.13 billion in December, according to the Customs Department. The baht has advanced 3.3 percent this year after exchange data showed foreign funds bought $1.7 billion more Thai stocks than they sold through yesterday.

“The baht is now running on a trade deficit,” said Goh Puay Yeong, a Singapore-based foreign-exchange strategist at Credit Suisse Group AG. “That’s mainly due to the flood reconstruction. In order for the baht to appreciate a lot more, it will probably need more portfolio inflows.”

The baht declined 0.5 percent this week and slid 0.1 percent today to 30.54 per dollar as of 3:04 p.m. in Bangkok, according to data compiled by Bloomberg. The baht may weaken to 31 in the next three months, Goh said.

The central bank is closely monitoring the baht, which is attracting demand from both buyers and sellers, Bank of Thailand Assistant Governor Pongpen Ruengvirayudh said today.

The yield on the government’s 3.25 percent notes due June 2017 increased 15 basis points, or 0.15 percentage point, to 3.42 percent this week, according to data compiled by Bloomberg. The rate rose one basis point today.

To contact the reporter on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net.

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

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