Bloomberg News

Baht Completes Biggest Monthly Gain Since 2008 on Fund Inflows

July 29, 2011

July 29 (Bloomberg) -- Thailand’s baht posted its biggest monthly advance in more than three years after global investors added to holdings of the nation’s assets on optimism elections held on July 3 will usher in political stability.

International funds bought $1.2 billion more Thai equities than they sold this month through July 28, the most since March 2010, exchange data show. Incoming leader Yingluck Shinawatra said today her Cabinet will likely be announced in the middle of next month. The baht fell earlier today on speculation the central bank will curb appreciation that may threaten the nation’s exports.

“There has been a good amount of inflows into Thailand since the election earlier this month, providing a boost to the baht,” said Kozo Hasegawa, a currency trader at Sumitomo Mitsui Banking Corp. in Bangkok. “But there’s concern about intervention, which is weighing on the baht at the moment.”

The baht strengthened 3.4 percent this month to 29.74 per dollar as of 3:22 p.m. in Bangkok, according to data compiled by Bloomberg. That was the biggest monthly gain since February 2008. The currency advanced 0.2 percent this week and was little changed from yesterday. The baht’s advance in July was the best performance among Asia’s 10 most-traded currencies excluding the yen.

Global investors bought a net $4.2 billion of Thai government debt this month, according to the Thai Bond Market Association.

Current-Account Surplus

Thailand had a current-account surplus of $2.5 billion in June, compared with a deficit of $511 million a month earlier, a Bank of Thailand report showed today. That was more than the median estimate in a Bloomberg News survey for an excess of $1.35 billion.

Government bonds had a second weekly gain. The yield on the 5.25 percent notes due May 2014 dropped six basis points, or 0.06 percentage point, to 3.75 percent, according to data compiled by Bloomberg. The rate fell five basis points today.

The one-year onshore interest-rate swap, the fixed cost needed to receive a floating payment, jumped 47.5 basis points this month and 4.5 basis points this week to 3.665 percent. The rate was up 2.5 basis points today.

--With assistance from Supunnabul Suwannakij and Suttinee Yuvejwattana in Bangkok. Editors: Ven Ram, Andrew Janes

To contact the reporter on this story: Yumi Teso in Bangkok at yteso1@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net


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