Bloomberg News

Baht Rises, Trimming Weekly Loss, as Investors Buy Thai Assets

March 15, 2012

Thailand’s baht strengthened, snapping a two-day loss, as international investors raised holdings of the nation’s assets on optimism growth in Southeast Asia’s second-largest economy will improve this year.

Global funds purchased $427 million more Thai equities than they sold this month through yesterday, and bought a net $2 billion of government debt, according to data from the stock exchange and the Thai Bond Market Association. The baht was poised for a third weekly loss as signs the U.S. recovery is gathering pace damped speculation the Federal Reserve will do more monetary easing, a move that may increase the amount of cash available to be invested in emerging-markets.

“The risk-on mood is still prevailing in the market and therefore, the emerging markets have been seeing fund inflows,” said Minori Uchida, senior analyst in Tokyo at Bank of Tokyo- Mitsubishi UFJ Ltd. “But this week’s main trend was the dollar’s appreciation supported by signs of U.S. economic improvement.”

The baht advanced 0.2 percent to 30.73 per dollar as of 8:39 a.m. in Bangkok, trimming its weekly decline to 0.5 percent, according to data compiled by Bloomberg. The currency reached 30.87 yesterday, the weakest level since Feb. 17.

One-month implied volatility, a measure of foreign-exchange swings used to price options, was little changed at 6.525 percent from yesterday and unchanged from a week ago.

The Federal Reserve said on March 13 it expects “moderate economic growth” and predicted the U.S. unemployment rate “will decline gradually.” Thailand’s gross domestic product may expand between 5.5 percent and 6.5 percent this year, compared with growth of 0.1 percent last year, Prime Minister Yingluck Shinawatra said on March 7.

The yield on the 3.25 percent government notes due June 2017 climbed 25 basis points, or 0.25 percentage point, to 3.65 percent this week, according to data compiled by Bloomberg. That was the biggest weekly increase since October 2010. The rate declined one basis point today.

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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