Thai Baht Has Weekly Loss on Europe, Growth Risk; Bonds Rise

Thailand’s baht had its biggest weekly loss in more than two months and government bonds rose amid concern Europe’s debt crisis will worsen, hurting global economic growth and curbing demand for Asian exports.

The MSCI Asia Pacific Index of shares fell for a second day as a report today showed July factory output unexpectedly declined in Japan, Thailand’s No. 2 export market. Spain delayed seeking a bailout as its regions such as Valencia sought more funds. The Bank of Thailand reported today overseas sales, which account for about two-thirds of its economy, shrank for a second month in July. Federal Reserve Chairman Ben S. Bernanke speaks at a meeting of central bankers today.

“Concern about Europe is lingering in the market and is continuing to weigh on stocks and emerging-market currencies,” said Tsutomu Soma, manager of investment trust & fixed income business unit at Rakuten Securities Inc. in Tokyo. “The export environment is quite weak and that doesn’t help either. For today, investors and traders are waiting for Bernanke’s speech,” limiting market fluctuations, he said.

The baht slumped 0.3 percent this week, the most since the five-day period ended June 22, to 31.34 per dollar as of 3:27 p.m. in Bangkok, trimming this month’s gain to 0.5 percent, according to data compiled by Bloomberg. The currency advanced 0.1 percent today.

One-month implied volatility, a measure of exchange-rate swings used to price options, dropped 25 basis points, or 0.25 percentage point, to 4.27 percent from a week ago and the end of last month. The rate was unchanged today.

Thailand’s exports dropped 3.9 percent in July from a year earlier after declining 2.3 percent the previous month, the central bank reported today.

The yield on the 3.25 percent bonds due June 2017 declined two basis points today and this week to 3.2 percent, according to data compiled by Bloomberg. It rose one basis point in August, after declining in each of the last four months.

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