Thai Baht Has Weekly Gain on View Faster Growth to Spur Inflows

Thailand’s baht had a second weekly advance as data boosted optimism the local economy is improving, and as overseas funds increased holdings of the nation’s debt.

Imports climbed 41 percent in January, compared with 4.7 percent in December, while export gains quickened to 16 percent from 13 percent, a government report showed on Feb. 27. Growth in the Southeast Asian economy will exceed 5 percent this year, Central bank Governor Prasarn Trairatvorakul said Feb. 26, following a 6.4 percent expansion in 2012. International investors bought $2.7 billion more sovereign notes than they sold in February, Thai Bond Market Association data show.

“The central bank has quite a bullish growth outlook and that is positive for further fund inflows,” said Tohru Nishihama, an economist covering the global emerging countries at Dai-ichi Life Research Institute Inc. in Tokyo. “A surge in imports also shows domestic demand is strong, and that fits in with the growth story.”

The baht strengthened 0.4 percent this week and 0.1 percent today to 29.74 per dollar as of 3:23 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 29 basis points, or 0.29 percentage point, today to 5.28 percent and rose three basis points from a week ago.

Industrial Output

Thailand posted a current-account deficit of $2.2 billion in January, compared with a $730 million surplus in December, while industrial output gained 10 percent, expanding for the fourth straight month, official data showed yesterday. The Office of Industrial Economics said yesterday 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 Bank of Thailand said yesterday local bonds attracted $3.1 billion of inflows in January and stocks received $500 million.

The yield on the 3.625 percent government notes due June 2023 was little changed today at 3.62 percent and was up one basis point from a week ago, data compiled by Bloomberg show. It reached 3.58 percent on Feb. 27, the least since Feb. 11.

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