Thailand’s 10-Year Bond Yield at 2-Week Low on Stable Politics

Thailand’s 10-year government bond yield traded near its lowest level in more than two weeks after Prime Minister Yingluck Shinawatra survived a no confidence vote in Parliament yesterday. The baht was little changed.

Yingluck, whose party won a parliamentary majority in the July 2011 election, received support from 308 members, while 159 voted to oust her after a debate on the government’s handling of the economy and allegations of corruption in a state rice program. The central bank kept its benchmark interest rate unchanged at 2.75 percent yesterday, signaled it may be done with easing as the economy is improving. That’s higher than 0.25 percent in the U.S. and 0.1 percent in Japan.

“The political situation is stable after the government survived the no-confidence vote,” said Disawat Tiaowvanich, a foreign-exchange trader at Bangkok Bank Pcl. (BBL) “Foreigners may want to continue buying bonds here.”

The yield on the 3.625 percent securities due June 2023 was little changed at 3.497 percent as of 8:33 a.m. in Bangkok, according to data compiled by Bloomberg. That’s the lowest level since Nov. 12.

Global funds bought $217 million more sovereign notes than they sold this week through yesterday, taking a net purchase this year to $28 billion, according to data from the Thai Bond Market Association.

The baht was little changed at 30.73 per dollar from 30.72 yesterday, according to data compiled by Bloomberg. One-month implied volatility, a measure of expected moves in exchange rates used to price options, dropped 21 basis points, or 0.21 percentage point, to 4.09 percent.

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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