Thai Baht Rebounds as Central Bank Raises 2012 Growth Forecast

Thailand’s baht gained, rebounding from an earlier decline, as the central bank raised its economic-growth estimate and kept borrowing costs unchanged.

The Bank of Thailand held its benchmark interest rate at 3 percent, a decision predicted by 19 of 21 economists surveyed by Bloomberg News. The monetary authority predicted gross domestic product will increase by 5.7 percent in 2012, compared with an earlier forecast for a 4.9 percent gain. The currency fell earlier as concern China’s economy is slowing dimmed the outlook for Thai exports and sapped demand for emerging-market assets.

“A better growth outlook means we can expect fund inflows to continue for Thailand’s stocks,” said Tohru Nishihama, an economist at Dai-ichi Life Research Institute Inc. in Tokyo. “A rate cut is unlikely for now, which also suggests Thailand will keep its yield advantage over developed nations.”

The baht strengthened 0.1 percent to 30.74 per dollar as of 3:21 p.m. in Bangkok, after falling by as much as 0.2 percent, according to data compiled by Bloomberg. One-month implied volatility, a measure of foreign-exchange swings used to price options, was little changed at 6.525 percent.

Global funds pumped $2.3 billion into local equities and $10 billion into government debt this year, exchange and Thai Bond Market Association data show. Thailand’s policy rate compares with a maximum of 0.25 percent in the U.S.

The yield on the 3.25 percent notes due June 2017 rose four basis points, or 0.04 percentage point, to 3.65 percent, according to data compiled by Bloomberg. One-year onshore interest-rate swaps, the fixed cost needed to receive a floating payment, added one basis point to 3.07 percent.