Baht Has Biggest Monthly Drop Since September on Fund Outflows

Baht Has Biggest Monthly Drop Since September on Fund Outflows
A customer hands Thai baht banknotes to a vendor at a market in Bangkok. Photographer: Brent Lewin/Bloomberg

Thailand’s baht had its largest monthly slide since September as global funds cut holdings of the nation’s stocks amid concern Europe’s debt crisis will hurt global growth. Government bonds rose.

The baht touched the lowest level since August 2010 as exchange data showed international investors sold $475 million more Thai equities than they bought this month. The MSCI Asia-Pacific Index of stocks saw the biggest monthly drop in more than three years after Spanish credit-default swaps surged to a record yesterday. The European Union accounted for 8.6 percent of Thailand’s exports in the first four months of 2012, official data show.

“With the risk aversion, investors are selling the risky assets, weighing on the baht,” said Paisarn Lertkowit, a currency trader at Bangkok Bank Pcl. “Investors are worried about Europe and are looking at which countries are the most affected by the slowdown in growth. Most Asian countries are vulnerable to a slowdown in the global economy as exports account for a large part of their economies.”

The baht, little changed today, slumped 3.5 percent this month to 31.86 per dollar as of 3:19 p.m. in Bangkok, according to data compiled by Bloomberg. The currency touched 31.96 earlier, the weakest level since August 2010. One-month implied volatility, a measure of foreign-exchange swings used to price options, was unchanged today and this month at 4.52 percent.

The baht has weakened because of the dollar’s strength and Europe’s problems, Singhachai Boonyayotin, the Bank of Thailand’s director, said today.

The yield on the 3.25 percent debt due June 2017 slid six basis points, or 0.06 percentage point, to 3.56 percent in May, according to data compiled by Bloomberg. The rate rose one basis point today.

Thailand recorded a current-account deficit for the second straight month in April as weakening global demand curbed exports. The deficit was $1.52 billion, matching the amount reported for March, the Bank of Thailand said today. Exports dropped 3.5 percent in April after a decline of 6.8 percent the previous month, the central bank report also showed.

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