Baht heads for weekly drop

Thailand's baht headed for a weekly decline before a government report that economists forecast will show a slowdown in export growth. Government bonds advanced.

Overseas sales rose 0.5% in September from a year earlier, compared with 3.9% in August, according to the median estimate in a Bloomberg survey before data due Friday.

The Bank of Thailand will revise its expansion forecast for Southeast Asia’s second-biggest economy at 2.30pm local time. The Ministry of Finance cut its 2013 growth projection to 3.7% from 4.5% last month.

The baht fell 0.3% this week to 31.143 per United States dollar as of 9.11am in Bangkok, according to data compiled by Bloomberg. The currency was little changed on Friday and has risen 0.5% this month, paring its loss this year to 1.8%.

"The market expects to see a lower gross domestic product () number so we may see a little reaction to that," said Nath Wongsaroj, a senior vice president at Mizuho Bank Ltd in Bangkok. The authorities are probably concerned that "a strong currency will affect exports," he said.

One-month implied volatility, a measure of expected moves in exchange rates used to price options, fell 26 basis points, or 0.26 percentage point, from a week ago to 6.28%. The gauge declined six basis points on Friday.

The yield on the 3.45% bonds due March 2019 dropped eight basis points this week to 3.48%, data compiled by Bloomberg show. The yield rose one basis point on Friday and closed at a four-month low of 3.47% on Thursday.

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Writer: Bloomberg News
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