Thailand’s three-year government bonds headed for their best week since November and the baht fell as the central bank cut borrowing costs.
The yield dropped to the lowest level since 2010 today after the Bank of Thailand lowered its benchmark interest rate to 2 per cent from 2.25 per cent on March 12, as expected by 16 of 26 economists surveyed by Bloomberg. The Constitutional Court will consider annulling the Feb 2 incomplete election and ruled on March 12 that Prime Minister Yingluck Shinawatra’s 2 trillion-baht ($62 billion) infrastructure bill was illegal.
“The rate cut was partly priced in before the meeting, but helped drag down yields and the baht after the decision,” said Kozo Hasegawa, a currency trader at Sumitomo Mitsui Banking Corp. in Bangkok. “Investors are keeping their eyes on political developments and, on that front, will stay on the sidelines for a while.”
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