The Thai baht, stocks and bonds slid to multi-month lows under foreign selling pressure on Wednesday, with investors worried that high oil prices and government spending plans would widen the Southeast-Asian nation’s current account deficit.
The baht fell 0.4%, while Thai shares slumped 0.9%, their lowest level since Aug. 16.
Long-tenor bond yields in Thailand have risen around 60 basis points so far this month to touch a 16-month high of 3.26%, according to LSEG data.
Thailand’s new government plans to sell government bonds worth up to 272 billion baht ($7.5 billion) in the October-December period, according to market sources.
“Market is worried that oil and fiscal stimulus would worsen the current account deficit. Thai bonds have sold off on worries of greater bond issuance to fund the fiscal stimulus. This is taking a toll on the baht,” said Moh Siong Sim, FX strategist at Bank of Singapore.
Apichart Phubancherdkul, head of strategy research at Tisco Securities, said investors are worried about the fiscal position as the government has announced various policies, which have both good and bad sides.
“If there are a lot of stimulus policies or cutting various costs, it will affect the budget and make borrowing costs higher. There is a concern about the fiscal position.”
In Indonesia, the rupiah fell 0.2% and touched its lowest level in more than six months.
Improving economic growth and changing dynamics in commodity prices are increasing the chance of a narrowing current account surplus, which is likely to pressure the rupiah, said Fakhrul Fulvian, an economist at Trimegah Securities.
Indonesia’s current account swung into deficit for the first time in two years in the second quarter due to falling commodity prices and weak global growth.
Yield on the benchmark 10-year bonds rose to 6.827%, its highest level since March 31.
Most other Asian emerging market currencies traded in narrow ranges ahead of the US Federal Reserve’s monetary policy decision due later in the day and regional central bank meetings this week.
The Philippine peso and the South Korean won eased 0.1% each. The Indian rupee traded flat.
Markets expect the Fed will almost certainly keep rates on hold at 5.25% to 5.50%, putting the focus on its stance about on further policy decisions.
Bank Indonesia and the Bangko Sentral ng Pilipinas are expected to keep their key interest rates steady on Thursday and for the rest of the year, according to Reuters’ polls.
Most stock markets across Asia slipped.
Shares in Kuala Lumpur and Shanghai retreated 0.3% each. Equities in Mumbai declined 1%.
Indonesia’s benchmark index was the sole outlier, rising 0.7% and marking its highest level since December 2022.
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