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Thai Bonds Rise as Investors Boost Debt Holdings; Baht Declines

Nov. 28 (Bloomberg) -- Thailand’s 10-year government bonds advanced, pushing the yield to the lowest level in almost three weeks, after foreign funds boosted holdings of the nation’s debt.

The central bank left its benchmark interest rate unchanged at 2.75 percent today, as expected by 16 of 19 economists surveyed by Bloomberg, after cutting borrowing costs last month. Overseas investors bought $318 million more sovereign notes than they sold yesterday, the most since Oct. 30, according to Thai Bond Market Association figures. They pulled $38 million from local shares, exchange data show.

“Investors want to put money into countries where domestic demand is strong,” said Hideki Hayashi, a researcher at the Japan Center for Economic Research in Tokyo. “They still prefer bonds to stocks as external demand is still fragile.”

The yield on the 3.65 percent securities due December 2021 fell one basis point, or 0.01 percentage point, to 3.375 percent as of 3:01 p.m. in Bangkok, according to data compiled by Bloomberg. That’s the lowest level since Nov. 8.

Three economists had predicted a 25 basis point reduction in interest rates today after the Bank of Thailand lowered borrowing costs by a quarter of a percentage point in October. Imports climbed 22 percent that month, the biggest increase in seven months, an official report showed this week.

The baht declined 0.1 percent to 30.72 per dollar, little changed from 30.71 before the rate decision, according to data compiled by Bloomberg. One-month implied volatility, a measure of expected moves in exchange rates used to price options, held at 4.3 percent.

“The BOT decision had little impact as it was already widely expected,” said Frances Cheung, a Hong Kong-based strategist at Credit Agricole CIB.

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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