Baht Climbs as Regional Data Spur Optimism Asian Recovery Intact

Thailand’s baht advanced as regional data released today bolstered confidence Asian economies will sustain growth amid Europe’s debt crisis. Government bonds were steady.

Machinery orders in Japan rose in April at almost four times the pace predicted by economists, while South Korea’s unemployment rate fell to a four-month low in May. The MSCI Asia-Pacific Index of shares rallied after the European Central Bank backed proposals for a banking union that would establish a deposit-guarantee program.

“Good data is providing temporary support to regional currencies,” said Amonthep Chawla, a Bangkok-based analyst at Kasikornbank Pcl. “Concern about Greece and Europe’s debt crisis is still there and that remains a risk factor.”

The baht advanced 0.3 percent to 31.59 per dollar as of 3:03 p.m. in Bangkok, according to data compiled by Bloomberg. Its one-month implied volatility, a measure of exchange-rate swings used to price options, was unchanged at 4.52 percent.

The Bank of Thailand left its benchmark interest rate unchanged at 3 percent at a review today, a decision predicted by all 18 economists in a Bloomberg News survey. Risks to growth outweigh inflation concern and policy makers are ready to adjust borrowing costs if needed, the central bank said today, adding that the current rate is “accommodative.”

The yield on the government’s 3.25 percent bonds due June 2017 was unchanged at 3.42 percent, according to data compiled by Bloomberg.

“A cut is an option for them in the future if the situation deteriorates and as inflation is not a major issue now,” said Satoshi Ushijima, the Bangkok-based vice president of the treasury division at Mizuho Corporate Bank Ltd. “We don’t see any impact on the foreign-exchange rate as such a view is already priced in.”

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