Baht Touches One-Week High on Possible China Stimulus, Inflows

Thailand’s baht touched a one-week high amid speculation Chinese policy makers will introduce more stimulus measures, boosting demand for emerging-market assets. Government bonds were little changed.

Premier Wen Jiabao said on a tour of southwest Sichuan province that while government measures to stabilize growth are “bearing fruit,” difficulties may persist for a while, the official Xinhua News Agency reported yesterday. Overseas funds bought $65 million more Thai equities than they sold last week, taking net purchases this month to $118 million, exchange data show.

“There is some speculation that a high-level meeting among policy makers in China will lead to additional supportive measures,” said Sacha Tihanyi, a senior currency strategist at Scotiabank in Hong Kong, a unit of Bank of Nova Scotia. Fund inflows reflect “positive sentiment towards the Thai baht,” he said.

The baht rose 0.1 percent to 31.63 per dollar as of 3:10 p.m. in Bangkok and touched 31.58 earlier, the strongest level since July 6, according to data compiled by Bloomberg. Its one-month implied volatility, a measure of exchange-rate swings used to price options, was unchanged at 5.02 percent. The yield on the 3.25 percent bonds due June 2017 was 3.29 percent, according to data compiled by Bloomberg.

A government report later this month may show exports, which account for about two-thirds of the economy, increased 2.5 percent in June after a 7.68 percent gain the previous month, according to the median estimate of economists in a Bloomberg survey. China is Thailand’s biggest overseas market, buying 12 percent of total shipments in the first five months of 2012, official data show.

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