Baht Posts Worst Losing Streak in Five Years on Fund Outflows

Thailand’s baht posted its fifth monthly decline, the longest losing streak in five years, after foreigners cut holdings of the nation’s assets as the Federal Reserve prepares to reduce stimulus. Bonds dropped.

The baht touched a three-year low this week as data showed exports fell for a third month in July and manufacturing dropped. Global funds pulled $2.7 billion from Thai bonds and stocks in August, official data show. The currency gained today as the prospect of an imminent strike against Syria diminished, reducing the chance oil supplies will be disrupted.

“Export numbers are still disappointing for Thailand, keeping underlying sentiment for the currency weak for a while,” said Nalin Chutchotitham, a Bangkok-based analyst at Kasikornbank Pcl.

The baht lost 2.7 percent this month to 32.12 per dollar as of 3:21 p.m. in Bangkok, according to data compiled by Bloomberg. The currency rose 0.2 percent today, paring its weekly decline to 0.9 percent. It has lost 8.9 percent since the end of March and touched 32.31 on Aug. 28, the weakest since Aug. 2, 2010.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, rose 103 basis points this month to 7.31 percent. It increased eight basis points, or 0.08 percentage point, today.

U.K. Prime Minister David Cameron failed to gain parliamentary backing for military action against Syria yesterday. The Fed will begin to slow bond purchases at its Sept. 17-18 meeting, according to 65 percent of economists surveyed by Bloomberg.

Deficit Forecast

Thailand posted a current-account deficit of $709 million in July, after a shortfall of $664 million the previous month, according to a central bank report today. Exports fell 1.5 percent last month, customs data showed on Aug. 26, and manufacturing dropped 4.5 percent.

The yield on the 3.625 percent sovereign bonds due June 2023 climbed 34 basis points in August to 4.32 percent, data compiled by Bloomberg show. The yield rose 13 basis points this week and fell six basis points today. It reached 4.39 percent on Aug. 28, the highest level for a benchmark 10-year security since November 2009.

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