Thailand's Baht Declines on Stock Outflows, Slowing Growth

By Shanthy Nambiar

Aug. 14 (Bloomberg) -- Thailand's baht fell on speculation slowing economic growth will prompt overseas investors to sell the nation's assets.

The baht extended this month's loss to 0.6 percent as crude oil jumped for a second day to $116.90 a barrel. Thailand imports all its fuel needs. Economic growth, which ``peaked'' in the first quarter, will slow the remainder of this year, Porametee Vimolsiri, a senior economic adviser, said yesterday.

``We are seeing some foreign selling in the stock market,'' said Thanomsri Fongarunrung, an economist at Phatra Securities Pcl in Bangkok. ``The outlook is still fragile. The global slowdown appears to be spreading. The trend is for depreciation in the baht.''

The baht fell 0.1 percent to 33.72 per dollar as of 9:30 a.m. in Bangkok, according to data compiled by Bloomberg. It rose as much as 0.9 percent yesterday, the biggest gain since June 6.

Global funds sold $65 million more Thai stocks than they bought this week, according to data compiled by Bloomberg.

``Expansion in the third quarter may weaken further because of accelerating inflation,'' said Porametee of the National Economic & Social Development Board. ``The government needs to restore confidence.''

Thailand's inflation rate rose to 9.2 percent in July, the highest since 1998, due to surging oil and food costs.

To contact the reporter for this story: Shanthy Nambiar in Bangkok at snambiar1@bloomberg.net.