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Baht Vies With Won for Title as Asia’s Best-Performing Currency

Usurper Threatens to Wrest Title of Top Asian Currency From Baht

(Bloomberg) -- The Thai baht’s reign as Asia’s best-performing currency is coming under threat from an unlikely source: South Korea’s won.

The baht has slumped into the bottom half of the regional rankings this quarter after heading the table for three consecutive three-month periods. The won meanwhile has shrugged off its chronic underperformance and rocketed to the top.

The main reason behind the Korean currency’s revival has been the sea-change in sentiment surrounding U.S.-China trade tensions. After the dispute between the world’s two-largest economies heightened through the early part of year, recent rhetoric suggests a phase-one deal is getting closer.

This has been a big fillip to the won as the two countries are by far the largest buyers of South Korea exports. The won has strengthened 2.5% against the dollar this quarter after sliding 6.7% during the first nine months of the year.

Baht Vies With Won for Title as Asia’s Best-Performing Currency

The won is also being supported by a brace of domestic factors. Industrial production growth for September was four times the median estimate of economists, while semiconductor inventories for the same month dropped the most in two years, suggesting a prolonged slump in tech demand may be easing. The won may get a further boost if trade data on Thursday backs up these green shoots.

Baht Falters

The baht has tumbled down the regional rankings after Bank of Thailand stepped up measures to cap the currency’s strength. Policy makers cut interest rates for the second time in three months on Nov. 6, lowering the benchmark to match an all-time low 1.25%. They also said they would ease rules on outflows to curb the surging currency.

Measures taking effect Nov. 8 included allowing exporters to keep a larger amount of money abroad, and scrapping most restrictions on outward transfers. The Bank of Thailand will review these policies every three months and take further steps if needed, Deputy Governor Mathee Supapongse said.

While still eking out a modest gain versus the greenback this quarter, the baht has dropped 0.4% from a six-year high set in late October. The currency may remain under pressure Monday as a report is forecast to show economic growth virtually stalled in the third quarter.

The baht-won cross -- a synthetic exchange rate calculated from the level of the two currencies against the dollar -- has dropped 3.4% from its August high. The pair has broken below an uptrend that has held since the start of the year and there’s every chance its recent losses may be just the start of longer decline.

Below are the key Asian economic data and events due this week:

  • Monday, Nov. 18: New Zealand performance service index, Singapore NODX, Thailand 3Q GDP
  • Tuesday, Nov. 19: RBA minutes and Assistant Governor Kent takes part in panel, Philippine BoP
  • Wednesday, Nov. 20: Japan trade balance, China loan prime rate, South Korea PPI, Malaysia CPI
  • Thursday, Nov. 21: New Zealand credit-card spending, Japan machine tool orders, South Korea 20-day exports/imports and 3Q household credit, Bank Indonesia rate decision, Thailand customs trade balance
  • Friday, Nov. 22: Japan CPI and manufacturing PMI

To contact the reporter on this story: David Finnerty in Singapore at dfinnerty4@bloomberg.net

To contact the editors responsible for this story: Tan Hwee Ann at hatan@bloomberg.net, Nicholas Reynolds

©2019 Bloomberg L.P.