Thai Baht, Bonds Advance as U.S. Data Eases Fed Tapering Concern

Thailand’s baht and government bonds advanced after U.S. retail sales data missed estimates, easing concern that the Federal Reserve will trim bond purchases this year that have spurred inflows to emerging markets.

Sales rose 0.4 percent in June, compared with the median forecast in a Bloomberg survey for a 0.8 percent increase, the Commerce Department reported yesterday. Fed Chairman Ben S. Bernanke said last week that the world’s largest economy still needs stimulus. The dollar fell against 10 of the world’s 16 major currencies today, data compiled by Bloomberg show.

“Weaker U.S. data dragged the dollar down,” said Disawat Tiaowvanich, a foreign-exchange trader at Bangkok Bank Pcl. The baht is still fluctuating on external factors including the U.S. data,” he said.

The currency appreciated 0.3 percent, snapping a two-day loss, to 31.08 per dollar as of 3:58 p.m. in Bangkok, according to data compiled by Bloomberg. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, climbed 33 basis points, or 0.33 percentage point, to 7.13 percent.

The Thai government will continue to reduce the budget deficit each year even as it plans to invest 2 trillion baht ($64 billion) on infrastructure over the next seven years, Finance Minister Kittiratt Na-Ranong told reporters in Bangkok today.

The yield on the 3.625 percent bonds due June 2023 dropped two basis points to 3.69 percent, data compiled by Bloomberg show.

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