The baht climbed to a three-week high and bonds rose as overseas investors added to their holdings of the country's assets on optimism China's economy is gaining traction.
The baht advanced for a fifth day on Thursday, the longest winning streak since January, after global funds boosted holdings of Thai stocks by more than US$100 million on each of the last two days, the biggest net purchases since June 28.
Chinese Premier Li Keqiang said on Wednesday that Asia's largest economy can achieve its main targets this year, bolstering the outlook for Thai exports to its biggest market.
"Risk sentiment is improving and funds are flowing into the nation, supporting the baht," said Tohru Nishihama, an economist covering emerging markets at Dai-ichi Life Research Institute Inc in Tokyo. "But I see this as a temporary rally in a weak market environment."
The baht appreciated 0.8% to 31.74 per dollar as of 9.07am in Bangkok, the strongest level since Aug 21 and the biggest gain in almost three weeks, according to data compiled by Bloomberg. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, dropped 16 basis points to 7.59%.
Foreigners turned net buyers of Thai debt on Wednesday for the first time in a week, purchasing 7.5 billion baht, the most since July 30, according to the Thai Bond Market Association.
China's export growth accelerated to 7.2% in August from 5.1% the previous month and industrial production grew 10.4% following a gain of 9.7%, official reports showed the past week. The nation bought 11.4% of Thai goods shipped overseas in the first seven months.
The yield on Thailand's 3.625% sovereign bonds due June 2023 declined one basis point, or 0.01 percentage point, to 4.35%, data compiled by Bloomberg show.