Thailand’s baht had its biggest weekly loss in more than two months and government bonds rose amid concern Europe’s debt crisis will worsen, hurting global economic growth and curbing demand for Asian exports.
The MSCI Asia Pacific Index (MXAP) of shares fell for a second day as a report today showed July factory output unexpectedly declined in Japan, Thailand’s No. 2 export market. Spain delayed seeking a bailout as its regions such as Valencia sought more funds. The Bank of Thailand reported today overseas sales, which account for about two-thirds of its economy, shrank for a second month in July. Federal Reserve Chairman Ben S. Bernanke speaks at a meeting of central bankers today.
“Concern about Europe is lingering in the market and is continuing to weigh on stocks and emerging-market currencies,” said Tsutomu Soma, manager of investment trust & fixed income business unit at Rakuten Securities Inc. in Tokyo. “The export environment is quite weak and that doesn’t help either. For today, investors and traders are waiting for Bernanke’s speech,” limiting market fluctuations, he said.
The baht slumped 0.3 percent this week, the most since the five-day period ended June 22, to 31.34 per dollar as of 3:27 p.m. in Bangkok, trimming this month’s gain to 0.5 percent, according to data compiled by Bloomberg. The currency advanced 0.1 percent today.
One-month implied volatility, a measure of exchange-rate swings used to price options, dropped 25 basis points, or 0.25 percentage point, to 4.27 percent from a week ago and the end of last month. The rate was unchanged today.
Thailand’s exports dropped 3.9 percent in July from a year earlier after declining 2.3 percent the previous month, the central bank reported today.
The yield on the 3.25 percent bonds due June 2017 declined two basis points today and this week to 3.2 percent, according to data compiled by Bloomberg. It rose one basis point in August, after declining in each of the last four months.
Thai Baht Has Weekly Loss on Europe, Growth Risk; Bonds Rise - Businessweek
Note that BlackRock is bullish on Thai bonds despite low yields on the belief that the government might ease monetary policy (which in turn will cause higher inflation): BlackRock Bullish on Thai Bonds, Region
Thai "bath?" You mean baht (บาท)? But Americans are taking a bath right now when buying baht, for sure.
Anybody investing in the market now is an idiot. The game is rigged, or haven't you been paying attention?
Frederick Douglass: Find out just what any people will quietly submit to
and you have found out the exact measure of injustice
and wrong which will be imposed upon them, and these
will continue till they are resisted with either
words or blows, or with both.
“Don’t believe them, don’t fear them, don’t ask
anything of them.”
As for your cynicism--if the game is rigged, who is rigging it and how?
Frankly as currencies fight to beat each other at the devaluation game we will see brief advantages for one currency over the others, until they catch up. The biggest influence on the Thai Baht is going to be the banking system's attitude towards the Thai progress on anti money laundering legislation. Personally I think the Thai banks are losing credibility abroad, and that will influence the ability of companies to trade with Thailand, which will put pressure on the Baht.
The biggest problem here is corruption. If you don't know whether your suppliers will keep to a contract, or how much the currency will be worth in six month's time, it becomes increasingly difficult to do business. Thailand may be the World's largest rice producer but nobody will buy the stuff if they think that, at the last minute, the supplier will demand more money, or the exchange rate will have made the product more expensive or, more commonly, the quality of the product is not as originally stated because it has been mixed with cheap, poor quality, rice imported from elsewhere.
Look at the FB IPO; disaster. NASDAQ rigged the price and blew it big time. They ended up libel for tens of millions of dollars as a result.