Thai Baht Poised for 5th Quarterly Loss as Funds Trim Holdings

By Shanthy Nambiar

March 31 (Bloomberg) -- Thailand’s baht was headed for a fifth quarterly decline, the longest stretch of losses since 2001, as an economic slump prompted overseas investors to reduce their holdings of the nation’s assets.

The currency added to last year’s 15 percent drop as global funds sold $147 million more Thai stocks than they bought since the end of December. The finance ministry forecast last week that the economy would shrink as much as 3 percent this year as exports slide and unemployment climbs. That would be the first annual contraction since 1998.

“People will have to price in the fact that there is still downside risk to growth,” said Enrico Tanuwidjaja, an economist at Oversea-Chinese Banking Corp. in Singapore. “The flight to safety scenario is still intact.”

The baht traded at 35.51 per dollar as of 11 a.m. in Bangkok, little changed from 35.54 yesterday, according to data compiled by Bloomberg. The currency has fallen 2.3 percent this quarter. It may decline to 36.5 by the end of June and 37 by the end of September, Tanuwidjaja said.

Nine of Asia’s 10 most-active currencies excluding the yen dropped against the U.S. dollar this year as the MSCI Asia Pacific Index of regional shares slumped 8.3 percent. Hong Kong’s dollar, which is pegged to the greenback, was little changed.

Thailand’s central bank doesn’t have “a preference for the baht to be weak or strong,” Deputy Governor Atchana Waiquamdee said last week. “We monitor the baht to make sure it doesn’t overshoot or undershoot regional currencies and affect our competitiveness.”

The Dollar Index, which the ICE uses to track the U.S. currency against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, has climbed 5 percent this year.

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