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Baht Gains on Speculation Exporters Remit Income; Bonds Climb

June 19 (Bloomberg) -- Thailand’s baht approached the strongest level in almost a month on speculation exporters are converting income. Government bonds rose.

Overseas shipments rose 0.65 percent in May from a year earlier after declining 3.67 percent in April, according to the median forecast of economists in a Bloomberg News survey before government data this week. The yield on five-year sovereign notes fell to the lowest in almost four months as Europe’s debt crisis spurred demand for the safest assets.

“The baht seems to get some support from companies repatriating overseas profits,” said Tohru Nishihama, an economist at Dai-ichi Life Research Institute Inc. in Tokyo. “Sentiment itself remains fragile as Europe’s debt problem still persists. That also means investors prefer bonds to stocks, providing some support for local debt.”

The baht appreciated 0.2 percent to 31.42 per dollar as of 3:14 p.m. in Bangkok, according to data compiled by Bloomberg. The currency touched 31.33 yesterday, the strongest level since May 22. Its one-month implied volatility, a measure of exchange-rate swings used to price options, was unchanged at 4.52 percent.

The yield on the 3.25 percent bonds due June 2017 fell one basis point, or 0.01 percentage point, to 3.32 percent, according to data compiled by Bloomberg. That was the lowest level since Feb. 26. It has dropped 20 basis points this month as international funds bought $2.1 billion more sovereign notes than they sold in the period through yesterday.

The Bank of Thailand cut its export growth forecast to about 8 percent this year from its earlier projection of 9 percent because of the deepening crisis in Europe, Songtham Pinto, director of the central bank’s office of macroeconomics, said today.

To contact the reporter on this story: Yumi Teso in Bangkok at yteso1@bloomberg.net

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net.

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