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Thai Baht Falls to Three-Year Low on Growth Concern; Bonds Drop

Aug. 27 (Bloomberg) -- Thailand’s baht slid to a three-year low and bonds fell after a surprise drop in exports added to concern Southeast Asia’s second-largest economy will struggle to emerge from a recession this quarter.

Overseas sales decreased 1.5 percent in July, the third decline in a row and less than the 0.8 percent gain forecast by economists surveyed by Bloomberg, a report showed yesterday. The country posted a current-account deficit of $550 million in July, according to another Bloomberg survey before data due Aug. 30, while figures released last week showed the nation entered a recession for the first time since 2009.

“The trade data boosted concern about the possibility of economic recovery in the third quarter,” said Tohru Nishihama, an economist covering emerging markets at Dai-ichi Life Research Institute Inc. in Tokyo. “In addition, the nation has been seeing a deficit in the current-account balance, putting downward pressure on the baht for a while.”

The baht depreciated 0.8 percent to 32.18 per dollar as of 3:32 p.m. in Bangkok and reached 32.19 earlier, the weakest level since Aug. 4, 2010, according to data compiled by Bloomberg. The currency has lost 3.5 percent this quarter. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, climbed 11 basis points, or 0.11 percentage point, to 7.32 percent.

Government bonds dropped, sending the 10-year yield to the highest level since 2009, as data showed global funds sold $1.2 billion more Thai debt than they bought this month through yesterday. The yield on the 3.625 percent sovereign notes due June 2023 rose 14 basis points to 4.29 percent, data compiled by Bloomberg show. That’s the highest level since December 2009.

Gross domestic product decreased 0.3 percent in the three months through June from the previous quarter, when it contracted 1.7 percent, the National Economic and Social Development Board said Aug. 19. The agency cut its 2013 expansion forecast to between 3.8 percent and 4.3 percent from an earlier estimate of 4.2 percent to 5.2 percent.

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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