Baht Rises This Week as Investors Boost Holdings of Thai Assets

Thailand’s baht advanced this week and government bonds rallied as foreign funds increased holdings of the nation’s assets amid speculation global central banks will ease monetary policy to spur growth.

China, Thailand’s biggest export market, yesterday reported inflation slowed for a fourth month in July to 1.8 percent, giving it more room for stimulus measures. International investors pumped a net $163 million into local equities and $767 million into government debt this week through yesterday, according to data from the stock exchange and the Thai Bond Market Association.

“Asian currencies continue to gain ground against the dollar, pricing in higher probability that the Federal Reserve and European Central Bank will satisfy expectations for further significant monetary easing,” said Sacha Tihanyi, a Hong Kong- based senior currency strategist at Scotiabank, a unit of Bank of Nova Scotia. “Slower inflation definitely does add to speculation of easing in China.”

The baht rose 0.2 percent this week to 31.49 per dollar as of 3:10 p.m. in Bangkok, according to data compiled by Bloomberg. The currency, unchanged today, touched 31.27 on Aug. 6, the strongest level since May 22. One-month implied volatility, a measure of exchange-rate swings used to price options, held steady today and this week at 4.51 percent.

The yield on the 3.25 percent bonds due June 2017 dropped six basis points this week to 3.10 percent, the lowest level since February, according to data compiled by Bloomberg. The rate declined one basis point, or 0.01 percentage point, today.

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.