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Baht Advances After Recovery Optimism Sends Stocks to 1996 High

Thailand’s baht advanced the most in more than a week after overseas investors bolstered holdings of local stocks to gain from an economic rebound, driving the nation’s share index to a 16-year high.

The SET Index of shares jumped 1.5 percent this week after rising to the highest level since February 1996. Foreign funds bought a net $83 million of local equities yesterday, the most since Dec. 12, according to exchange data. Gross domestic product will rise 5.7 percent this year, exceeding a previous forecast of 5.5 percent, the Finance Ministry said this week.

“In terms of growth, the economy is on track,” said Julia Goh, an economist at CIMB Investment Bank Bhd. in Kuala Lumpur. “I’m quite confident about next year’s growth as domestic demand has strengthened, offsetting the risk from lingering external headwinds.”

The baht rose 0.1 percent to 30.61 per dollar in Bangkok, according to data compiled by Bloomberg. The currency was little changed this week and appreciated 3.1 percent this year, after advancing 5 percent in 2011.

One-month implied volatility, a measure of expected moves in exchange rates used to price options, was little changed at 3.91 percent. It fell 261 basis points in 2012.

The SET Index (SET) has gained 36 percent this year as domestic investments and consumption recovered from floods in 2011 that were the worst in almost seven decades. The government also raised minimum wages and offered tax incentives for automobile purchases to boost growth.

Global money managers have plowed a net 22 billion baht ($718 million) into local equities this month, beating a 6.2 billion baht inflow in November, exchange data show.

The yield on the 3.875 percent government bonds due June 2019 was little changed today and fell five basis points, or 0.05 percentage point, this week to 3.23 percent in Bangkok, according to data compiled by Bloomberg. It declined six basis points this month and was at 3.25 percent at the end of 2011.

To contact the reporter on this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net

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

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