Bloomberg News

Thailand’s Baht Rises on Stocks Inflows; Bonds Gain as Rate Held

October 19, 2011

Oct. 19 (Bloomberg) -- Thailand’s baht rose, approaching a three-week high, after international investors boosted holdings of local assets. Government bonds advanced as the central bank kept its benchmark interest rate unchanged today.

Global funds bought $83 million more Thai shares than they sold in the first two days of this week, exchange data show. The baht may pare gains on concern the nation’s worst floods in five decades will hurt the economy, according to Okasan Securities Co. The Bank of Thailand held its one-day bond repurchase rate at 3.5 percent after this year’s six increases, a decision predicted by all but one of 17 economists surveyed by Bloomberg. One expected a 25-basis point cut.

“Risk appetite may not be that great but if you compare the region’s growth with other developed nations, Asia is still better, attracting funds,” said Tsutomu Soma, a Tokyo-based bond and currency dealer at Okasan Securities. “The floods will decrease Thai exports and hurt the economy.”

The baht gained 0.2 percent to 30.69 per dollar as of 3:19 p.m. in Bangkok, according to data compiled by Bloomberg. The currency touched 30.54 on Oct. 17, the strongest level since Sept. 22.

The Bloomberg-JPMorgan Asia Dollar Index climbed for a second day after Singapore said last week economic growth accelerated in the third quarter and China reported data that showed industrial production and retail sales beat economists’ estimates in September.

At least 930 factories in Thailand have been damaged by the floods, according to the Ministry of Industry. The disaster may erase between 1 percentage point and 1.7 percentage points of economic growth this year, Finance Minister Thirachai Phuvanatnaranubala said on Oct. 17.

Government bonds rose as the central bank halted the longest series of borrowing-cost increases since 2006.

The yield on the 5.25 percent notes due May 2014 declined one basis point, or 0.01 percentage point, to 3.33 percent, according to data compiled by Bloomberg.

--With assistance from Suttinee Yuvejwattana in Bangkok. Editors: Anil Varma, 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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