Baht Has Best Month Since 2008 as Thai Economy Expands Most in 15 Years

Thailand’s baht headed for its best month since February 2008 as the economy grew at the fastest pace in 15 years in the first half of the year and the central bank signaled it may increase borrowing costs further.

The baht is the best performer in August among Asia’s most- traded currencies as exchange data show global funds bought $428 million more of Thai equities than they sold, beating combined net purchases for June and July. The Bank of Thailand last week raised borrowing costs for a second time this year, and Assistant Governor Paiboon Kittisrikangwan said the rates remain “very low compared to the economic growth even after the increase.”

“The baht rose due to fund inflows into stocks and bonds,” said Paisarn Lertkowit, a currency trader at Bangkok Bank Pcl, the country’s biggest lender. “Good fundamentals triggered overseas investors to come into Thailand. The market still expects one more rate hike.”

The baht advanced 3.1 percent this month and was little changed from yesterday to trade at 31.3 per dollar as of 8:33 a.m. in Bangkok, according to data compiled by Bloomberg. The currency has climbed 6.4 percent this year, the second-best performance among Asia’s 10 most-actively traded currencies excluding the yen.

The central bank will probably say at 2:30 p.m. local time that industrial production climbed 15.3 percent in July from a year earlier, after rising 21.3 percent the previous month, according to the median estimate in a Bloomberg survey of economists.

Government data last week showed gross domestic product rose 9.1 percent in the second quarter after having increased 12 percent in the three months to March, the best two quarters of growth since 1995. The central bank’s one-day bond repurchase rate will climb to 2 percent by the end of the year from 1.75 percent now, according to the median forecast of 12 economists surveyed by Bloomberg. One of them predicted the rate will rise to as much as 2.25 percent.

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

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