Thai Bonds, Baht Rise This Week as China Slowdown Concern Eases

Thailand’s 10-year government bonds snapped a three-week decline and the baht rose as data from China eased concern Asia’s largest economy is slowing.

The 10-year yield fell to the lowest level in more than a week and the baht rebounded from a one-month low as China, Thailand’s biggest export market, yesterday reported overseas shipments rose 5.1 percent in July, after a 3.1 percent drop in June. Thailand’s parliament passed the first reading of an amnesty bill yesterday for political prisoners and those facing charges related to government protests after a 2006 coup that toppled then-prime minister Thaksin Shinawatra.

“China’s data lifted sentiment in the market,” said Pareena Phuangsiri, a Bangkok-based analyst at Kasikornbank Pcl. “The fact that there’s no intensity in the political situation so far also gave a short-term boost, but investors will still be cautious about the situation.”

The yield on the 3.625 percent sovereign bonds due June 2023 dropped 11 basis points this week to 3.91 percent as of 3:07 p.m. in Bangkok, according to data compiled by Bloomberg. The rate, which fell two basis points today, was at its lowest level since July 29.

The baht advanced 0.1 percent today and this week to 31.23 per dollar, according to data compiled by Bloomberg. It touched 31.49 on Aug. 7, the weakest level since July 8. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, rose 23 basis points, or 0.23 percentage point, to 6.48 percent today. The gauge climbed 28 basis points this week.

China’s industrial output rose more than estimated in July, adding to signs the economy is stabilizing after unexpectedly strong trade figures yesterday. Factory production increased 9.7 percent from a year earlier, the National Bureau of Statistics said today in Beijing, compared with the median estimate of an 8.9 percent increase in a Bloomberg survey.

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