Thai Baht, Bonds Advance as Improving Economy Lures Global Funds

Thailand’s baht strengthened for a second day and government bonds rose on speculation a brightening outlook for the economy will spur global demand for the nation’s assets.

Overseas investors bought $3.2 billion more sovereign debt than they sold this month and pumped a net $209 million into equities, official data show. Imports rose 5.3 percent in February after an increase of 41 percent in January, a fifth monthly advance, a government report today showed.

“Increasing imports show domestic demand in Thailand remains strong and the nation’s solid outlook continues to attract funds from overseas,” said Tsutomu Soma, manager of Rakuten Securities Inc.’s fixed-income business unit department in Tokyo. “Inflows are basically supporting the baht and bonds and the trend will continue for now.”

The baht gained 0.2 percent to 29.26 per dollar as of 3:15 p.m. in Bangkok, according to data compiled by Bloomberg. The currency reached 29.08 on March 20, the strongest level since a 1997 devaluation sparked the Asian financial crisis. It has rallied 5.3 percent in six months, the best performance among 25 emerging-market currencies tracked by Bloomberg.

Thailand’s $346 billion economy expanded 6.4 percent in 2012, outpacing growth of 5.6 percent in Malaysia, 6.2 percent in Indonesia and 1.3 percent in Singapore, according to official data. The Bank of Thailand raised its 2013 expansion forecast to 4.9 percent in January from 4.6 percent in October.

One-month implied volatility in the baht, a measure of expected moves in the exchange rate used to price options, dropped two basis points to 5.21 percent.

The yield on the government’s 3.625 percent bonds due June 2023 fell four basis points, or 0.04 percentage point, to 3.46 percent, data compiled by Bloomberg show. That was the lowest level since Nov. 6.

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