Thailand's government bonds rose, pushing the three-year yield to a 10-month low, after international investors boosted holdings on speculation the central bank will lower borrowing costs. The baht fell.
The Bank of Thailand cut its 2013 growth forecast to 4.6% on Oct 26 from a previous estimate of 5%, after unexpectedly reducing its policy rate by a quarter of a percentage point to 2.75% on Oct 17. Foreign funds bought $1.9 billion more Thai sovereign notes than they sold in October, while paring stock holdings by a net US$582 million, data from the Thai Bond Market Association and stock exchange show.
"The funds are flowing into Asia, and for Thailand capital is going to bonds rather than stocks," said Kozo Hasegawa, a Bangkok-based foreign-exchange trader at Sumitomo Mitsui Banking Corp. "There are some investors who see a chance of more rate cuts" after the central bank lowered its economic expansion estimate," he said.
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