Baht Touches One-Week High on Possible China Stimulus, Inflows

Thailand’s baht touched a one-week high amid speculation Chinese policy makers will introduce more stimulus measures, boosting demand for emerging-market assets. Bonds were little changed.

Premier Wen Jiabao said on a tour of southwest Sichuan province that while government measures to stabilize growth are “bearing fruit,” difficulties may persist for a while, the official Xinhua News Agency reported yesterday. Overseas funds bought $65 million more Thai equities than they sold last week, taking net purchases this month to $118 million, exchange data show.

“There is some speculation that a high-level meeting among policy makers in China will lead to additional supportive measures,” said Sacha Tihanyi, a senior currency strategist at Scotiabank in Hong Kong, a unit of Bank of Nova Scotia. Fund inflows reflect “positive sentiment towards the Thai baht,” he said.

The baht was unchanged at 31.66 per dollar as of 8:39 a.m. in Bangkok and touched 31.58 earlier, the strongest level since July 6, according to data compiled by Bloomberg. Its one-month implied volatility, a measure of exchange-rate swings used to price options, was unchanged at 5.02 percent. The yield on the 3.25 percent bonds due June 2017 was 3.29 percent, according to data compiled by Bloomberg.

A government report this week may show exports, which account for about two-thirds of the economy, increased 0.25 percent in June after a 7.68 percent gain the previous month, according to the median estimate of economists in a Bloomberg survey. China is Thailand’s biggest overseas market, buying 12 percent of total shipments in the first five months of 2012, official data show.

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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