Bloomberg News

Baht Gains for Third Day on Fund Inflows Into Stocks; Bonds Rise

October 10, 2011

Oct. 10 (Bloomberg) -- Thailand’s baht advanced for a third day after overseas investors added to holdings of the nation’s assets last week. Government bonds climbed.

The baht extended its first weekly gain in a month after global funds purchased $243 million more local equities and $120 million more government bonds than they sold last week, data from the stock exchange and the Thai Bond Market Association show. Concern the nation’s worst floods in more than half a century will crimp export growth may check the currency’s appreciation, according to Disawat Tiaowvanich, a foreign- exchange trader at Bangkok Bank Pcl.

“In the short run, market sentiment is improving due to European developments,” said Bangkok-based Disawat. “The floods are going to hurt the Thai economy since industrial hubs have been affected and some factories need to be closed for a while.”

The baht strengthened 0.2 percent to 30.88 per dollar as of 3:05 p.m. in Bangkok, according to data compiled by Bloomberg. It reached 30.85 on Oct. 7, the strongest level since Sept. 28. The currency may trade between 30.80 and 31.30 this week, Disawat said.

Central bank Deputy Governor Suchada Kirakul said today the baht has appreciated in line with the improving condition in Europe. Nine of 10 most actively-traded currencies in Asia excluding the yen advanced versus the dollar today.

Flood waters broke through defenses around the Rojana Industrial Park that is located north of Bangkok, a base for companies that make automotive and electronics parts. Honda Motor Co., Japan’s third-largest automaker, and the world’s two biggest makers of high-end cameras, Canon Inc. and Nikon Corp., are among companies with operations at the factories.

The disaster has already cost an estimated 69 billion baht ($2.2 billion) and costs may rise to as much as 120 billion baht, Somchai Sujjapongse, director-general of the ministry’s fiscal policy office, said today.

The yield on the 5.25 percent bonds due May 2014 dropped six basis points, or 0.06 percentage point, to 3.45 percent, according to data compiled by Bloomberg. The price rose to 104.386 from 104.235 at the end of last week.

--With assistance from Suttinee Yuvejwattana in Bangkok. Editors: Ven Ram, Sandy Hendry

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

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net


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