Baht Gains This Week on Inflows Before Next Week’s GDP Figures

Thailand’s baht headed for its biggest five-day gain in three weeks as overseas investors pumped funds into the nation’s assets before next week’s gross domestic product report.

GDP may have been flat in the second quarter, after contracting 0.6 percent in the previous three months, according to the median estimate in a Bloomberg survey. Overseas investors purchased a net $344 million of Thailand’s bonds and equities this week as of yesterday, exchange data show, as consumer confidence rose to an 11-month high.

“With rising stocks and recent steady risk sentiment, fund inflows to emerging markets including Thailand may continue and will support the baht,” said Tsutomu Soma, department manager of the fixed-income business unit at Rakuten Securities Inc. in Tokyo. “The baht will remain on a gradual appreciation trend.”

The currency climbed 0.9 percent from Aug. 8 and rose 0.1 percent today to 31.846 per dollar as of 3:52 p.m. in Bangkok, according to data compiled by Bloomberg. It reached 31.830 earlier today, the highest level since July 30. The baht may rise to 31.50 by mid-September, Soma predicts.

One-month implied volatility, a measure of expected exchange-rate swings used to price options, dropped 20 basis points to 4.53 percent this week, data compiled by Bloomberg show. It fell three basis points, or 0.03 percentage point. today.

Thailand’s SET Index of shares climbed 1.9 percent this week to 1,548.90 late in Bangkok, headed for the highest close since June 2013.

Bonds Fall

The military government, which took control in a May 22 coup, pushed through more than 92 billion baht ($2.9 billion) in payments to farmers in June that had been delayed under the previous administration of Yingluck Shinawatra. The National Council for Peace and Order, the group of junta leaders, approved 67 billion baht in infrastructure spending, economic chief Prajin Juntong told reporters yesterday.

The Bank of Thailand kept its key interest rate unchanged for a third straight meeting on Aug. 6 as spending and consumer confidence improved after the coup ended months of political unrest.

Government bonds fell this week, with the yield on the 3.625 percent notes due June 2023 rising five basis points to 3.45 percent, according to data compiled by Bloomberg. It was little changed today.

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