April 8 (Bloomberg) -- Thailand’s baht gained the most in seven weeks and 10-year government bonds rose as data showed overseas investors increased holdings of local debt.
The nation plans to issue 113 billion baht ($3.5 billion) of notes this quarter, compared with 138 billion baht a year earlier, official figures show. The baht rose, tracking yesterday’s gains in some regional currencies, after U.S. jobs data that trailed estimates pushed back the anticipated timetable for interest-rate increases.
The baht appreciated 0.7 percent from April 4, the most since Feb. 17, to 32.325 per dollar as of 3:45 p.m. in Bangkok, according to prices from local banks compiled by Bloomberg. Local markets were shut yesterday for a holiday. Global funds bought $440 million more Thai debt than they sold last week, the biggest inflow since the five-day period ended Oct. 18, official data show.
“Demand and supply conditions are supportive of bonds,” said Toru Nishihama, an economist covering emerging markets at Dai-ichi Life Research Institute Inc. in Tokyo. “There may be some purchases of Thai assets as the political situation remains calm, but I don’t see aggressive buying as the unrest is unlikely to be resolved anytime soon.”
One-month implied volatility in the baht, a measure of expected exchange-rate moves used to price options, fell 32 basis points from the end of last week to 5.77 percent and reached 5.71 percent earlier, the lowest level since November.
Thailand’s National Economic & Social Development Board said it may cut 2014 growth estimate from the current 3 percent to 4 percent because of impact from the political unrest. The nation’s Constitutional Court last month invalidated a February vote and the Election Commission said March 21 it may be at least three months before a new ballot can be held, keeping Prime Minister Yingluck Shinawatra’s government in caretaker mode.
The yield on the 3.625 percent sovereign notes due June 2023 dropped two basis points, or 0.02 percentage point, from April 4 to 3.67 percent, the lowest level since March 17, data compiled by Bloomberg show.
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