Baht slumps as economy in recession
- Published: 20/08/2013 at 11:22 AM
- Online news:
Thailand’s baht slumped to a one- year low after Southeast Asia’s second-largest economy entered a recession for the first time since 2009. Government bonds were little changed.
Gross domestic product unexpectedly decreased 0.3% in the three months through June from the previous quarter, when it contracted a revised 1.7%, the National Economic and Social Development Board said Monday.
The agency cut its 2013 expansion forecast to 3.8% to 4.3% from 4.2% to 5.2%. The MSCI Asia-Pacific Index of shares fell for a fourth day amid speculation the US Federal Reserve will cut stimulus that inflated emerging-market asset prices.
“Risk sentiment is hurt due to declines in stocks,” said Hideki Hayashi, a researcher at the Japan Center for Economic Research in Tokyo. “Amid weak risk appetite, growth concern is further weighing on the currency.”
The baht slumped 0.9%, the most since June 20, to 31.66 per dollar as of 9.07am in Bangkok, according to data compiled by Bloomberg. It reached 31.76 earlier, the weakest level since July 25, 2012. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, climbed 19 basis points, or 0.19 percentage point, to 6.37%.
The Bank of Thailand will keep its benchmark interest rate at 2.5% on Wednesday, according to all 20 economists surveyed by Bloomberg.
BNP Paribas SA cut its 2013 growth forecast for Thailand to 3% from 4.5%, Philip McNicholas, a senior economist in Hong Kong, wrote in a research note dated Tuesday.
The yield on the 3.625% sovereign notes due June 2023 was steady at 3.98%, data compiled by Bloomberg show.
About the author
Writer: Bloomberg News