Thai Baht, Bonds Gain Second Month as Overseas Funds Buy Assets

Thailand’s baht and government bonds gained a second month as overseas investors bought more local assets amid speculation the Federal Reserve will delay cutting its record stimulus that’s spurred emerging-market inflows.

Global funds purchased $1.4 billion more Thai bonds than they sold this month through yesterday and poured a net $89 million into stocks, official data show. The Fed maintained its $85 billion of monthly bond purchases yesterday, saying it needs to see more evidence that the economy is improving, while noting signs of “underlying strength.” The U.S. temporarily resolved a budget impasse earlier, ending a 16-day government shutdown.

“Risk sentiment improved this month with the U.S. reaching a deal on its debt, while there’s speculation of a delay in stimulus reduction,” said Tsutomu Soma, the manager of the fixed-income business unit at Rakuten Securities Inc. in Tokyo. “We are seeing some fund inflows to the region, and that helped the baht and bonds.”

The baht advanced 0.6 percent in October to 31.115 per dollar as of 4:13 p.m. in Bangkok, according to data compiled by Bloomberg. The currency, which declined 0.2 percent today, trimmed this year’s loss to 1.7 percent.

One-month implied volatility, a measure of expected moves in exchange rates used to price options, dropped 149 basis points from the end of September to 5.93 percent. The rate rose 16 basis points, or 0.16 percentage point, today.

A central bank report today showed the nation posted a current-account deficit of $534 million in September, compared with the median forecast in a Bloomberg survey for a surplus of $913 million and an excess of $1.3 billion the previous month.

“A further gain in the baht seems a bit difficult with some negative domestic factors,” Rakuten’s Soma said.

The yield on the 3.125 percent debt due December 2015 fell 17 basis points this month to 2.83 percent, data compiled by Bloomberg show. The rate, which declined one basis point today, reached 2.82 percent on Oct. 28, the lowest level since June.

Before it's here, it's on the Bloomberg Terminal.