Thai Baht Climbs as U.S. Shutdown Cuts Dollar Demand; Bonds Rise

Thailand’s baht gained, extending a rebound from last month’s three-year low to 4 percent, as U.S. lawmakers’ failure to resolve a budget impasse damped demand for the dollar. Government bonds advanced.

President Barack Obama said he was “exasperated” with Republican lawmakers, while House Speaker John Boehner said Obama refused to negotiate in a meeting with Congressional leaders. China’s non-manufacturing purchasing managers’ index rose to a six-month high of 55.4 last month, data showed today. Thailand’s exports climbed in August, snapping three months of declines, and the current-account balance showed a surplus for the first time since March, according to official figures.

“With the problem in the U.S., investors don’t want to buy the dollar,” said Hideki Hayashi, a researcher at the Japan Center for Economic Research in Tokyo. “Asia, including Thailand, will be a beneficiary of the recovery in China and other regions through exports.”

The baht rose 0.2 percent to 31.233 per dollar as of 3:50 p.m. in Bangkok, according to data compiled by Bloomberg. It fell to 32.48 on Sept. 6, the weakest level since July 2010. One-month implied volatility, a measure of expected swings in the exchange rate used to price options, increased five basis points, or 0.05 percentage point, to 7.47 percent.

Thailand’s overseas sales will recover in the fourth quarter while the government is concerned that the partial U.S. government shutdown may cause foreign-exchange volatility, Finance Minister Kittiratt Na-Ranong said yesterday.

Improving Exports

Shipments rose 3.9 percent in August from a year earlier after a decline of 1.5 percent the previous month, a customs report showed on Sept. 26. The country posted a current-account surplus of $1.3 billion for the month, following a deficit of $1.6 billion in July, according to central bank data. China is Thailand’s largest overseas market, with a share of 11 percent of goods shipped in the first eight months of this year.

The yield on the 3.625 percent bonds due June 2023 fell one basis point to 3.84 percent, according to data compiled by Bloomberg.

Finance Minister Kittiratt said today the central bank’s benchmark rate of 2.5 percent is too high.

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