Thailand’s Five-Year Bonds Fall a Fourth Week on Growth Outlook

Thailand’s five-year bonds fell for a fourth week, pushing the yield to the highest since March, after the central bank predicted an economic pickup.

The yield on the government’s 3.875 percent bonds due June 2019 jumped six basis points, or 0.06 percentage point, from June 27 to 3.21 percent as of 3:42 p.m., according to data compiled by Bloomberg. That’s the highest level since March 26. The rate was little changed today.

Southeast Asia’s second-biggest economy will have a “V-shaped” recovery in the second half as political tension eases, Bank of Thailand Governor Prasarn Trairatvorakul said yesterday. Increased government spending and domestic consumption will help boost growth, he said, tempering bets the central bank will ease policy to spur expansion.

“The improving economic outlook has eliminated speculation of a possible rate reduction and strengthened the view for possible tighter monetary policy in 2015,” Komsorn Prakobphol, senior investment strategist at Tisco Financial Group Pcl, said by phone from Bangkok.

An increase in government spending and a rebound in private consumption will drive economic growth to as much as 2 percent in 2014, Somkid Jatusripitak, a former finance minister and now an adviser to the military rulers, said June 24. Gross domestic product decreased 0.6 percent in the first quarter as political protests hurt production and tourism.

The baht strengthened 0.3 percent since June 27 to 32.377 per dollar, set for a second weekly advance, according to data compiled by Bloomberg. It gained 0.1 percent today.

One-month implied volatility in the baht, a measure of expected exchange-rate moves used to price options, fell three basis points to 4.51 percent today. It dropped 14 basis points for the week.

To contact the reporter on this story: Anuchit Nguyen in Bangkok at anguyen@bloomberg.net

To contact the editors responsible for this story: Michael Patterson at mpatterson10@bloomberg.net; James Regan at jregan19@bloomberg.net Anil Varma, Robin Ganguly

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