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Thai Baht, Bonds Advance This Month on Signs of China Recovery

Oct. 31 (Bloomberg) -- Thailand’s baht and government bonds had monthly gains as signs of a pickup in China’s economy helped to increase demand for regional assets.

Global funds bought $1.9 billion more local sovereign debt than they sold this month, according to data from the Thai Bond Market Association. Reports this month showed exports and investment gathered pace in China, the biggest buyer of goods shipped from Thailand. The Southeast Asian nation’s overseas sales will recover in the second half of 2013 as the global economy improves, central bank director Mathee Supapongse said today. Ten-year sovereign bonds yield 3.31 percent in Thailand, compared with 1.75 percent in the U.S.

“Funds are flowing into Asia as its economy is more solid than other regions and still offers higher yields than developed nations,” said Tsutomu Soma, manager of the investment trust and fixed-income business unit at Rakuten Securities Inc. in Tokyo. “Fund inflows are supporting regional currencies.”

The baht strengthened 0.4 percent this month and 0.1 percent today to 30.68 per dollar as of 3:22 p.m. in Bangkok, according to data compiled by Bloomberg. The currency had a fifth monthly advance, the longest winning streak since October 2010.

One-month implied volatility, a measure of exchange-rate swings used to price options, held steady today and this month at 4.27 percent.

Exports declined 0.1 percent in September after a drop of 5.1 percent in August, a central bank report showed today.

The yield on the 3.25 percent notes due June 2017 dropped 25 basis points, or 0.25 percentage point, to 3.06 percent from the end of September, according to data compiled by Bloomberg. That’s the largest monthly drop in a year. The rate slid two basis points today.

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

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

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