Bloomberg News

Thai Bonds Advance as Growth Seen Luring Inflows; Baht Steady

April 01, 2013

Thailand’s government bonds advanced on speculation the nation’s improving economy will lure inflows from overseas investors. The baht was little changed.

The finance ministry said March 29 that it raised its 2013 growth forecast to 5.3 percent from 5 percent because of increased private consumption. Foreign funds pumped a net $4 billion into local debt and stocks in the first quarter, Bank of Thailand Assistant Governor Paiboon Kittisrikangwan said the same day, driving a 4.3 percent gain in the baht against the dollar this year, the best performance in Asia.

“Bond yields will remain under downward pressure and the baht will stay on a gradual appreciation path as fund inflows will probably continue,” said Shigehisa Shiroki, chief trader on the Asian and emerging-markets team at Mizuho Corporate Bank Ltd. in Tokyo.

The yield on the 3.625 percent debt due June 2023 fell one basis point, or 0.01 percentage point, to 3.54 percent as of 8:47 a.m. in Bangkok, according to data compiled by Bloomberg. The rate reached 3.46 percent on March 28, the lowest level since Nov. 6.

The central bank will leave its benchmark interest rate unchanged tomorrow at 2.75 percent, according to 17 of 18 economists surveyed by Bloomberg, with one predicting a cut of 25 basis points. The monetary authority has held the rate since October, when it reduced it from 3 percent.

The baht traded at 29.32 per dollar, compared with 29.33 yesterday, according to data compiled by Bloomberg. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, dropped four basis points to 5.16 percent.

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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