Thailand's 10-year government bonds advanced, pushing the yield to the lowest level in almost three weeks, after foreign funds boosted holdings of the country's debt before the central bank reviews interest rates on Wednesday afternoon.

Overseas investors bought US$318 million more sovereign notes than they sold yesterday, the most since Oct 30, according to Thai Bond Market Association figures. They pulled $38 million from local shares, exchange data show. The central bank will leave borrowing costs unchanged after cutting last month, according to a Bloomberg survey. Imports climbed 22% in October, the biggest increase in seven months, an official report showed this week.

"Investors want to put money in to countries where domestic demand is strong," said Hideki Hayashi, a researcher at the Japan Centre for Economic Research in Tokyo. "They still prefer bonds to stocks as external demand is still fragile."

The yield on the 3.65% bonds due December 2021 fell one basis point, or 0.01 percentage point, to 3.37% as of 8.42am in Bangkok, according to data compiled by Bloomberg. That is the lowest level since Nov 8.

The Bank of Thailand will keep its benchmark interest rate at 2.75% Wednesday after lowering it by a quarter of a percentage point in October, according to 16 of 19 economists surveyed by Bloomberg. Three predict a 25-basis-point reduction. The decision is due at 2.30pm in Bangkok.

The baht traded at 30.70 per dollar, compared with 30.69 on Tuesday, according to data compiled by Bloomberg. One-month implied volatility, a measure of expected moves in exchange rates used to price options, was unchanged at 4.3%.

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