Thai Baht Snaps Four-Day Drop on Inflow Optimism; Bonds Steady

Thailand’s baht snapped a four-day decline after U.S. President Barack Obama expressed confidence he will be able to reach a budget agreement with Congress, boosting risk sentiment. Government bonds were steady.

The MSCI Asia Pacific Index (MXAP) of shares climbed by the most in a month as Obama began a new round of deficit-reduction talks with top Republicans and Democrats in a bid to avoid automatic tax increases and spending cuts set to take effect in January, the so-called fiscal cliff. Foreign funds bought $481 million more sovereign notes than they sold this month, according to data from the Thai Bond Market Association.

“Asia is still the place where investors like to put their money,” said Disawat Tiaowvanich, a foreign-exchange trader at Bangkok Bank Pcl. (BBL) “But investors want to see how the U.S. will deal with the fiscal cliff.”

The baht appreciated 0.2 percent to 30.71 per dollar as of 8:48 a.m. in Bangkok, according to data compiled by Bloomberg. One-month implied volatility, a measure of exchange-rate swings used to price options, was unchanged at 4.3 percent.

Southeast Asia’s second-largest economy expanded 3 percent in the third quarter from a year earlier, compared with 4.2 percent growth in the previous three months, according to the median estimate in a Bloomberg survey before official data due 9:30 a.m. local time.

The yield on the 3.625 percent notes due May 2015 was little changed at 2.88 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

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.