Baht rises, bonds decline

Baht rises, bonds decline

Thailand's baht rose for a second day as gains in United States equities and economic indicators boosted risk sentiment and brightened the outlook for Asian exports.

The Dow Jones Industrial Average (INDU) surged to a record on Tuesday and a report showed service industries in the US expanded in February at the fastest pace in a year as a recovery in housing rippled through the economy. Confidence among American households rose in February, a consumer sentiment survey showed March 1. The US is Thailand's second-largest export market along with Japan, purchasing 9.9% of the total shipments in January, official data show.

"Continued gains in US stocks encourage investors to take risks and put more funds into the emerging markets," said Yuji Kameoka, chief currency strategist at Daiwa Securities Co in Tokyo. "We have seen strong US data recently, which is also good for Asian exports."

The baht rose 0.2% to 29.76 per US dollar as of 9.11am in Bangkok, according to data compiled by Bloomberg. One- month implied volatility, a measure of expected moves in the exchange rate used to price options, declined one basis point, or 0.01 percentage point, to 5.11%.

Ample supply of liquidity and the global economic recovery will boost inflows into Asia and increase pressure on the baht to appreciate, Chalitrat Chandrubeksa, a deputy government spokesman said on Tuesday, citing a report from the state- planning agency, the National Economic and Social Development Board.

The Institute for Supply Management's non-manufacturing index, which covers about 90% of the US economy, increased to 56 last month from 55.2 in January, compared with the median forecast in a Bloomberg survey of a reading of 55. The Thomson Reuters/University of Michigan final index of consumer sentiment climbed to 77.6 from 73.8 in January.

The yield on Thailand's 3.625% government notes due June 2023 rose one basis point to 3.64%, the highest level since Feb. 15, data compiled by Bloomberg show.

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