Thailand's baht declined the most in more than five weeks as concern that stalled United States budget talks will hamper efforts to revive the global economy reduced demand for emerging-market assets.
Congress will return on Thursday to resume negotiations aimed at averting more than US$600 billion in automatic tax increases and spending cuts, due early next year, that could hurt the world's largest economy. Huang Guobo, chief economist and director of the reserves management department at China's State Administration of Foreign Exchange, said the country does not plan large economic stimulus measures, according to comments posted on Tsinghua University's website.
"SAFE's comment suggested that China isn’t going to play Santa and the US Congress certainly isn't inclined to do so," said Vishnu Varathan, a Singapore-based economist at Mizuho Corporate Bank Ltd. "People are getting out of risk."
The baht weakened 0.2%, the most since Nov 16, to 30.64 per US dollar as of 9.15am in Bangkok, according to data compiled by Bloomberg. The currency has gained 3% this year. One-month implied volatility, a measure of expected moves in exchange rates used to price options, rose 34 basis points, or 0.34 percentage point, to 3.89%.
Thailand's economy may grow at least 5% next year, supported by an export recovery and state investment, after expanding about 5% in 2012, Finance Minister Kittiratt Na-Ranong told reporters in Bangkok on Tuesday.
The yield on the government's 3.625% notes due June 2023 declined one basis point to 3.53%, the lowest level since Dec 6, data compiled by Bloomberg show.