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Thai Baht Falls on Currency Sale Concern: World's Biggest Mover
By Yumi Kuramitsu and Jake Lee
Nov. 17 (Bloomberg) -- Thailand's baht, Asia's best performer this year, weakened on concern the central bank will sell the currency to prevent its gains from hurting exports.
Thai exporters such as Thai Union Frozen Products Pcl, the world's second-biggest tuna canner, this week asked the central bank to curb the appreciation, saying it has undermined their competitiveness. Bank of Thailand Governor Tarisa Watanagase said on Nov. 15 the central bank is ready to buy or sell the currency, which this week touched a seven-year high.
``Exporters raising their voices led to speculation the central bank will come in,'' said Koji Fukaya, chief economist and currency analyst in Tokyo at Bank of Tokyo-Mitsubishi UFJ Ltd. The central bank ``will probably be successful in putting a break on the currency's gain.''
The baht dropped 0.4 percent to 36.63 at 9.52 a.m. in Bangkok, erasing its weekly gain and posting the world's biggest currency move so far today. It may trade between 36.50 and 37 in a week, Fukaya said.
The baht reached the highest since 1999 on Nov. 14 as overseas investors bet the economy will pick up after armed forces ousted Thaksin Shinawatra as prime minister in the Sept. 19 coup. Consumer confidence rose for the second straight month in October to a seven-month high, according to the University of the Thai Chamber of Commerce.
Exporters Complain
Thai exporters of chicken meat, shrimps, soybean and other products are losing orders to competitors in China, Indonesia and Vietnam, whose currencies are strengthening at a slower pace than the baht, Poj Aramwattananont, president of Thai Frozen Foods Association, said yesterday at a press conference held by 10 industry groups.
A stronger currency increases the costs of Thai products overseas and reduces baht-denominated profits of exporters. The baht climbed 12 percent this year against the dollar, the best performer among 15 most actively traded Asia-Pacific currencies. China's yuan rose 2.5 percent, Indonesia's rupiah climbed 7.2 percent and Vietnam's dong fell 1.1 percent.
Thailand is relying on overseas sales to achieve its growth forecast of as much as 5 percent this year. Thailand's exports rose 16 percent from a year earlier to $35 billion in the third quarter, based on customs data compiled by Bloomberg.
The central bank, which holds its next monetary policy- setting meeting on Dec. 13, halted a run of nine straight rate increases in July. The interim government said last month it plans to boost state spending next year to help economic growth.
Thailand's baht is fluctuating too much because of foreign money flowing into the country and the region, Tarisa said on Nov. 15. Fund managers outside of the nation bought $3.2 billion more of Thai equities than they sold this year through yesterday, according to stock exchange data.
The world's biggest movers are based on changes in price or yield and are screened for the size of the market and amount of daily trading