Baht Snaps Three-Day Loss on Optimism Growth Will Spur Inflows

Thailand’s baht halted a three-day decline and government bonds rose for a second day amid optimism an improving local economy and relatively higher yields than developed nations will spur more fund inflows.

The economy grew 18.9 percent in the fourth quarter, after expanding a revised 3.1 percent in the previous three months, official data showed yesterday. Global funds bought $1.4 billion more sovereign debt than they sold this month through yesterday, Thai Bond Market Association data show. The central bank, which reviews monetary policy tomorrow, should cut its benchmark rate to help curb inflows, Arkhom Termpittayapaisith, head of the National Economic & Social Development Board, said yesterday.

“Thailand’s economy seems to be quite strong and that may attract more inflows,” said Tohru Nishihama, an economist at Dai-ichi Life Research Institute Inc. in Tokyo. “The baht may stay in a narrow range near the current level as there is some concern about the intervention.”

The baht traded at 29.88 per dollar as of 3:19 p.m. in Bangkok, compared with 29.89 yesterday, according to data compiled by Bloomberg. It touched 29.94 yesterday, the weakest level since Feb. 11. The currency has strengthened 2.3 percent this year.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, dropped eight basis points, or 0.08 percentage point, to 5.25 percent.

The Bank of Thailand will keep its benchmark interest rate at 2.75 percent, according to 16 of 19 economists surveyed by Bloomberg. The remaining three predict a quarter of a percentage point reduction. The rate compares with a maximum of 0.25 percent in the U.S. and 0.1 percent in Japan.

The yield on the 3.625 percent government bonds due June 2023 declined one basis point to 3.62 percent, data compiled by Bloomberg show.