Thai bonds rose for a sixth week on speculation the slowest inflation in five years will give the central bank room to cut interest rates and spur economic growth.
The yield on government notes due in June 2023 dropped six basis points to 2.7% from Dec 5 as of 11.35am, the lowest level in at least four years and taking the decline since Oct 31 to 40 basis points, Thai Bond Market Association data show.
The baht climbed 0.7% for the week to 32.791 per dollar, according to data compiled by Bloomberg.
Thailand’s economy will expand no less than 1% this year, Prime Minister Prayut Chan-o-cha said in a Dec 3 speech to the Joint Foreign Chambers of Commerce. That would be the slowest annual growth rate since 2011. A slump in crude oil prices may offer further relief on the inflation front in a nation that’s a net importer of the fuel and saw annualized consumer-price increases ease to 1.26%t in November.
“Some investors are speculating on an interest-rate cut with the economy remaining sluggish and inflation slowing,” said Kozo Hasegawa, a foreign-exchange trader at Sumitomo Mitsui Banking Corp in Bangkok. “That will continue to put downward pressure on yields.”
The local-currency bonds climbed 0.4% for the week across all maturities, a Bloomberg index shows. The gauge reached a record 129.79 on Friday.
The Bank of Thailand meets to set interest rates on Wednesday, and 16 of the 18 economists surveyed by Bloomberg forecast no change and two a 25 basis-point cut.
Mr Hasegawa said the central bank will keep the policy rate unchanged next week, predicting a range for the Thai currency of 32.65 to 32.95.