Baht Approaches 13-Year High as Thailand's Growth Outlook Boosts Inflows

Thailand’s baht rose, approaching its strongest level in 13 years, as global funds add to holdings of the nation’s assets after the central bank predicted the economy will grow in 2010 at the fastest pace since 1995.

Overseas investors bought $273 million more Thai shares than they sold in September according to exchange data, boosting inflows that have made the baht the best performer among Asia’s 10 most-actively traded currencies in the past month. The economy will expand as much as 7.5 percent in 2010, the Bank of Thailand said on July 23.

“Regional currencies are rising because of fund inflows, and we see inflows into Thailand as well,” said Disawat Tiaowvanich, a foreign-exchange trader at Bangkok Bank Pcl, the nation’s biggest lender. “Asia’s economic outlook is better than in other places like Europe and the U.S. The baht’s appreciation will continue.”

The baht gained 0.1 percent to 31.15 per dollar as of 8:59 a.m. in Bangkok, according to data compiled by Bloomberg. The currency has gained 2.8 percent in the past month and touched 31.06 on Sept. 6, the strongest level since August 1997. The baht may reach 31 this week, Disawat said.

Government data released on Aug. 23 showed the economy grew 9.1 percent in the second quarter after having expanded 12 percent in the first, prompting the Bank of Thailand two days later to raise its benchmark rate by 25 basis points to 1.75 percent. A basis point is 0.01 percentage point.

The central bank will boost the one-day bond repurchase rate to 2 percent by year-end, according to the median estimate of 12 economists surveyed by Bloomberg.

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

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