Thai Baht Has Biggest Monthly Advance Since February on Stimulus

Thailand’s baht rose this month by the most since February on optimism the military government’s stimulus measures will revive the economy.

The baht strengthened 1.2 percent in June to 32.449 per dollar as of 3:45 p.m. in Bangkok, the third-best performance among 24 emerging-market currencies tracked by Bloomberg. It was little changed today and for the quarter. The SET Index of shares jumped 5 percent this month, the most since September.

Junta leader Prayuth Chan-Ocha completed 92 billion baht ($2.8 billion) of overdue payments to rice farmers this month and has approved 122.8 billion baht in investment projects. An increase in government spending and a rebound in private consumption will drive economic growth to as much as 2 percent in 2014, according to Somkid Jatusripitak, a former finance minister and now an adviser to the military rulers.

“The effects of the junta’s economic policies will be visible” in the second half, Tim Leelahaphan, an economist at Maybank Kim Eng Securities (Thailand) Pcl in Bangkok, wrote in a research note today. He forecasts growth of 2.5 percent in 2014, higher than the central bank’s 1.5 percent prediction.

Southeast Asia’s second-biggest economy shrank 0.6 percent in the first quarter as political protests hurt production and tourism. Army Chief Prayuth Chan-Ocha seized power in a coup on May 22 after seven months of protests.

Failed Sale

A report today showed the nation’s current-account deficit widened less-than-expected to $664 million in May from a $643 million shortfall the previous month, according to the Bank of Thailand. The median estimate of eight economists surveyed by Bloomberg was for a $900 million gap.

Global investors bought a net $1.4 billion of Thai debt this month as of June 27, poised for the biggest inflow since October, data from the Thai Bond Market Association show.

The central bank’s bill sales failed today for the second time in June. The monetary authority sold 10.11 billion baht of 189-day securities versus the target of 25 billion baht, and 23.74 billion baht of 364-day bills compared with a planned 40 billion baht.

The yield on the 3.875 percent government bonds due June 2019 climbed one basis point today and four basis points this month to 3.16 percent.

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