Thailand's three-year government bond yield was near a two-year low after international investors added holdings amid speculation the central bank will keep borrowing costs low this year. The baht held steady.
Global funds bought US$133 million more sovereign notes than they sold in the first two days of this week, while cutting holdings of local stocks by a net $150 million, data from the Thai Bond Market Association and stock exchange show. Inflation slowed to 3.32% in October from 3.38% the previous month, according to a Nov 1 official report. The Bank of Thailand, which cut its benchmark interest rate by a quarter percentage point to 2.75% on Oct. 17, next reviews monetary policy on Nov 28 .
"Thai bonds are supported by fund inflows from overseas as inflation was lower than expected and rates are expected to stay low," said Wee-Khoon Chong, a strategist at Societe Generale SA in Hong Kong. "Also, there’s a possible asset allocation shift out of Thai equities into bonds."
The yield on the 3.625% notes due May 2015 was unchanged at 2.87% as of 8.40am in Bangkok, according to data compiled by Bloomberg. The rate reached 2.83% on Nov 7, the lowest level in two years.
The Bank of Thailand cut its 2013 growth forecast to 4.6% from its earlier projection of 5% on Oct 26. The monetary authority also reduced its inflation estimate for next year to 2.8% from 3.4%.
The baht was steady at 30.68 per dollar, according to data compiled by Bloomberg. One-month implied volatility, a measure of exchange-rate swings used to price options, was unchanged at 4.27%.