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Thai Baht Drops to Eight-Month Low, Bonds Fall on Fund Outflows

June 11 (Bloomberg) -- Thailand’s baht fell to an eight-month low and government bonds declined as foreign investors cut holdings of the nation’s assets amid speculation the Federal Reserve will rein in its monetary stimulus.

Global funds sold $143 million more Thai sovereign debt than they bought this month through yesterday and pulled a net $744 million from equities, official data show. The dollar advanced against most of Asian currencies today after Standard & Poor’s increased the U.S.’s AA+ credit-rating outlook to stable from negative yesterday. A U.S. jobs report released June 7 topped estimates, bolstering the case for a cut in the Fed’s $85 billion a month of debt buying.

“Any signs of recovery in the U.S. lead to speculation of a reduction of easing, which raises concerns about fund outflows from Asia,” said Tsutomu Soma, manager of Rakuten Securities Inc.’s fixed-income business unit in Tokyo. “The dollar is broadly stronger against Asian currencies, supported by the S&P news.”

The baht fell 0.5 percent to 30.96 per dollar as of 3:14 p.m. in Bangkok and touched 30.99 earlier, the weakest level since Oct. 1, according to data compiled by Bloomberg. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, climbed 10 basis points, or 0.10 percentage point, to 6.88 percent.

The yield on the 3.625 percent bonds due June 2023 rose six basis points to 3.78 percent, the highest level since September, data compiled by Bloomberg show.

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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