Bloomberg News

Thailand’s Baht Extends Gain on Growth Outlook, U.S. Budget Deal

January 01, 2013

Thailand’s baht rose to near a three- month high on signs regional economic growth is gaining traction and U.S. lawmakers are closing in on a budget deal to avert automatic tax increases and spending cuts.

The currency added to a 3.1 percent gain in 2012 after reports showed Singapore’s economy expanded more than economists estimated last quarter and China’s manufacturing expanded for a third month in December. Thailand’s Finance Ministry said on Dec. 26 the nation’s gross domestic product will expand 5.7 percent in 2012, versus an earlier forecast of 5.5 percent, as exports recover.

“The Thai economy is doing well on domestic consumption and exports should pick up in 2013,” said Kampon Adireksombat, a senior economist in Bangkok at Tisco Securities Co. “If we get something on the U.S. budget, it will support capital inflows and lift the baht higher.”

The baht rose 0.3 percent to 30.52 per dollar as of 9 a.m. in Bangkok from 30.60 on Dec. 28, according to data compiled by Bloomberg. That’s the strongest level since Oct. 8. The currency may advance to 30 by the end of 2013, Adireksombat said.

The U.S. Senate approved a bill, now being considered by the House, that would make permanent the tax cuts for most households that expired on Dec. 31, continue expanded unemployment benefits and postpone spending cuts for two months.

One-month implied volatility, a measure of expected moves in exchange rates used to price options, dropped to 3.81 percent from 3.91 percent on Dec. 28. It fell 261 basis points, or 2.61 percentage points, in 2012.

The yield on the 3.875 percent government bonds due June 2019 rose three basis points to 3.26 percent, data compiled by Bloomberg show. It declined five basis points last year.

Consumer prices in Southeast Asia’s second-largest economy probably rose 3.2 percent in December from a year earlier, compared with 2.74 percent in November, according to the median forecast in a Bloomberg News survey. The commerce ministry will report inflation figures today.

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

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


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