Baht Touches 10-Week High After Global Funds Buy Local Stocks

Thailand’s baht touched a 10-week high after foreign investors pumped money into local stocks on optimism the nation’s economic growth prospects are improving.

Overseas funds bought $384 million more Thai shares than they sold this month, taking net purchases in 2012 to $2.1 billion, exchange data show. Gross domestic product may increase 5.8 percent in 2012, compared with an earlier prediction of 5.7 percent, Bank of Thailand Governor Prasarn Trairatvorakul said in Bangkok on Dec. 13. Europe will return to growth in the near future and the U.S. economy’s fundamentals are in place, World Bank President Jim Yong Kim said in Stockholm on Dec. 11.

“Barring natural disasters, Thailand’s prospects are fairly constructive for next year in the sense that it should benefit from the global recovery,” said Sim Moh Siong, a currency strategist at Bank of Singapore Ltd. “The central bank keeps a close eye on the competitiveness of the baht.”

The baht rose 0.1 percent to 30.61 against the dollar as of 3:08 p.m. in Bangkok, according to data compiled by Bloomberg. It touched 30.55 earlier, the strongest level since Oct. 8, and has gained 3.1 percent this year. One-month implied volatility, a measure of expected moves in exchange rates used to price options, fell three basis points to 3.89 percent.

Standard & Poor’s affirmed Thailand’s BBB+ credit rating, the third-lowest investment grade, last week. S&P cited the Southeast Asian nation’s “favorable external position” and the credibility of its monetary policy. Overseas funds have pumped $10 billion into Thai bonds so far in 2012 and inflows will continue, Bank of Thailand Deputy Governor Pongpen Ruengvirayudh said on Dec. 15.

The yield on the government’s 3.125 percent notes due December 2015 rose one basis point to 2.96 percent, the highest level since Oct. 18, data compiled by Bloomberg show. The yield has risen five basis points, or 0.05 percentage point, this month.

To contact the reporter on this story: Liau Y-Sing in Kuala Lumpur at yliau@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to 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.