Thai Bonds, Baht Have Monthly Gain on Increasing Fund Inflows

Thailand’s government bonds and the baht completed a monthly advance as global funds increased holdings to take advantage of higher yields.

The benchmark 10-year yield reached a two-week low yesterday as Thai Bond Market Association data showed international investors bought $2.4 billion more sovereign debt than they sold in February. Thailand’s 10-year bonds yielded 3.6 percent, compared with 1.89 percent for similar-maturity U.S. Treasuries and 0.66 percent in Japan. Central bank data today showed Southeast Asia’s second-largest economy had a current account deficit of $2.2 billion in January, compared with an excess of $730 million in December.

“The trend remains intact that funds are flowing to the region to seek for higher yields,” said Tsutomu Soma, fixed-income business unit manager at Rakuten Securities Inc. in Tokyo. “Demand for the baht and the dollar seems to be quite balanced amid increasing portfolio inflows and growing imports.”

The yield on the 3.625 percent government notes due June 2023 fell 12 basis points, or 0.12 percentage point, this month to 3.6 percent as of 3:14 p.m. in Bangkok, according to data compiled by Bloomberg. The rate rose two basis points today. It reached 3.58 percent yesterday, the least since Feb. 11.

Industrial production climbed 10 percent in January, after a revised increase of 23 percent in December, according to a report today by the Office of Industrial Economics. It said the manufacturing production index will rise between 3.5 percent and 4.5 percent this year compared with a 2.51 percent gain last year.

The baht strengthened 0.3 percent from a month ago and today to 29.74 per dollar, data compiled by Bloomberg show. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, added nine basis points today to 5.38 percent, taking this month’s increase to 39 basis points.

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