Baht Rises as China Stimulus Optimism Brightens Export Outlook

Thailand’s baht approached a four- month high after Chinese Premier Wen Jiabao signaled there’s more room for policy measures to spur growth, improving the region’s export outlook. Government bonds dropped.

The Bloomberg-JPMorgan Asia Dollar Index touched the highest level since May after Wen said yesterday that China, Thailand’s top export market, still has “ample strength” to use fiscal and monetary policy to boost growth. Global funds bought $410 million more Thai sovereign debt than they sold in the first two days of this week, according to the Thai Bond Market Association.

“Speculation about China’s stimulus is supportive for Asian countries that have strong trade ties with China,” said Tohru Nishihama, an economist at Dai-ichi Life Research Institute Inc. in Tokyo. “Under the current environment where investors remain somewhat cautious, funds are coming to Asia and more so to the bond markets.”

The baht climbed 0.4 percent to 30.97 per dollar as of 3:35 p.m. in Bangkok, according to data compiled by Bloomberg. It touched 30.89 on Sept. 10, the strongest level since May 4. One- month implied volatility, a measure of exchange-rate swings used to price options, was unchanged at 4.27 percent.

China bought about 12 percent of goods shipped from the Southeast Asian nation in the first seven months of 2012, official data show.

Thailand’s sovereign notes dropped as the benchmark SET Index of shares advanced the most in almost a week. The yield on the 3.25 percent bonds due June 2017 rose five basis points, or 0.05 percentage point, to 3.38 percent, according to data compiled by Bloomberg.

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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