Baht biggest monthly drop since Sept
The baht had its largest monthly slide since September as global funds cut holdings of the country's stocks amid concern Europe's debt crisis will hurt global growth. Government bonds rose.
- Published: 31/05/2012 at 07:02 PM
- Newspaper section: breakingnews
The baht touched the lowest level since Aug 2010 as exchange data showed international investors sold US$475 million more of Thai equities than they bought this month. The MSCI Asia-Pacific Index (MXAP) of stocks saw the biggest monthly drop in more than three years after Spanish credit-default swaps surged to a record on Wednesday. The European Union accounted for 8.6 per cent of Thailand's exports in the first four months of 2012, official data show.
"With the risk aversion, investors are selling the risky assets, weighing on the baht,” said Paisarn Lertkowit, a currency trader at Bangkok Bank Pcl (BBL). "Investors are worried about Europe and are looking at which countries are the most affected by the slowdown in growth. Most Asian countries are vulnerable to a slowdown in the global economy as exports account for a large part of their economies."
The baht, little changed on Thursday, slumped 3.5 per cent this month to 31.86 per dollar as of 3.19pm in Bangkok, according to data compiled by Bloomberg. The currency touched 31.96 earlier, the weakest level since August 2010. One-month implied volatility, a measure of foreign-exchange swings used to price options, was unchanged Thursday and this month at 4.52 per cent.
The baht has weakened because of the dollar’s strength and Europe's problems, Bank of Thailand director Singhachai Boonyayotin said on Thursday.
The yield on the 3.25 per cent debt due June 2017 slid six basis points, or 0.06 percentage point, to 3.56 per cent in May, according to data compiled by Bloomberg. The rate rose one basis point Thursday.
Thailand recorded a current-account deficit for the second straight month in April as weakening global demand curbed exports. The deficit was $1.52 billion, matching the amount reported for March, the Bank of Thailand said. Exports dropped 3.5 per cent in April after a decline of 6.8 per cent the previous month, the central bank report also showed.
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- Writer: BLOOMBERG