Baht Has Biggest Monthly Drop Since 2001 on Stock Outflows

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The baht dropped this month by the most in more than 14 years after the government cut forecasts for growth and exports, spurring outflows from Thai equities as the U.S. prepares to raise interest rates.

The currency fell 4.2 percent to 35.245 a dollar as of 4:15 p.m. in Bangkok, the sharpest monthly loss since March 2001, Bloomberg-compiled data show. It declined 0.5 percent on Friday and earlier reached 35.280, the lowest level since May 2009.

The economy is slowing as Prime Minister Prayuth Chan-Ocha, who seized power in a military coup in May 2014, fails to spur a revival and as planned investment in infrastructure falls short of target. While overseas investors sold a net $856 million of stocks this month as of July 29, the most since May 2014, an index of sovereign bonds rose, suggesting demand for the relative safety of debt.

“The baht has fallen in line with a strong dollar,” said Tsutomu Soma, department manager of the fixed-income business unit at Rakuten Securities Inc. in Tokyo. “Thai political uncertainties are also weighing on investor confidence.”

Thailand’s government is under increasing pressure to overhaul the cabinet and bolster the economy as waning consumer confidence and a slump in manufacturing portend one of the region’s slowest expansions, according to analysts.

The economy may grow 3 percent in 2015, the finance ministry said on July 28, down from an April estimate of 3.7 percent. Exports have contracted for six straight months and a central bank report Friday showed they fell 8.9 percent last month from a year earlier.

Overseas shipments may drop in 2015 by more than the Bank of Thailand’s 1.5 percent forecast, Senior Director Roong Mallikamas said on Friday.

A Bloomberg index of Thai sovereign bonds gained 0.9 percent in July, halting a two-month drop. The three-year yield declined 17 basis points from June 30 to 1.6 percent and the 10-year yield fell 13 basis points to 2.83 percent.