THAILAND - Yesterday the baht weakened to 32 per US dollar for the first time since August 2010 as official data showed global funds sold US$582 million (S$739 million) more Thai bonds than they bought this month through yesterday and pulled out a net Bt30.6 billion (S$1.2 billion) from equities. A government report this week showed that Southeast Asia's second-largest economy entered a recession for the first time since 2009.
Tak Bunnag, executive vice president of Bank of Ayudhya's treasury group, said the weakening of the baht was partly due to fundamentals of the Thai economy, to which investors gave 30-per-cent weight when deciding where to put their money.
Estimates of growth in Thailand's gross domestic product were lowered on Monday to 3.8-4.2 per cent after growth in the second quarter was slower than in the first.
He said the economies of most Asian countries were slowing along with China's, with a consequent depreciation of their currencies.
Year to date, the baht has depreciated by 4.8 per cent against the dollar. Indonesia's rupiah has weakened by 12.6 per cent and India's rupee has seen the largest decline at 19.6 per cent.
Tak said investors had reallocated their funds ahead of the tapering of the United States' quantitative-easing programme. If the US Federal Reserve ends QE, the baht might not drop much, and might even begin strengthening again.
Markets expect the Fed to reduce its bond purchases next month.
Kampol Adireksombat, senior economist at Tisco Securities, said the baht was depreciating too much as foreign investors were worried about emerging-market economies. Some current accounts are in deficits.
The baht weakened 0.75 per cent to 32.07 per dollar yesterday morning.