Thailand's baht was set for its biggest weekly advance in a month and government bonds rose as foreign funds pumped money into local assets on signs the political situation is stabilising.
Overseas investors have bought a net US$604 million of Thai stocks and $1.1 billion of the country’s debt since the end of February as anti-government protesters removed blockades in Bangkok and authorities lifted an emergency decree.
The baht has rallied in line with regional peers on the back of dollar weakness, Bank of Thailand spokeswoman Roong Mallikamas said yesterday. The currency fell the most in three weeks today as the MSCI Asia Pacific Index of shares slumped.
The baht rose 0.5% this week, the most since the five-day period ended March 7, to 32.308 per dollar as of 8.52am in Bangkok, according to data compiled by Bloomberg. It weakened 0.3% today after strengthening 0.8% over the previous three days and reaching a three-week high of 32.137 yesterday.
"Recent inflows of funds supported the baht amid easing political tension," said Tsutomu Soma, manager of the fixed- income business unit at Rakuten Securities Inc. in Tokyo. "As gains through yesterday were quite fast, it’s natural to see a correction before the weekend."
One-month implied volatility in the baht, a measure of expected exchange-rate moves used to price options, slumped 57 basis points this week to 5.52%. The gauge declined eight basis points, or 0.08 percentage point, today.
Thailand’s National Economic and Social Development Board (NESDB) said on April 8 it may cut its 2014 expansion estimate for the country’s economy from the current range of 3% to 4% because of the impact from the political unrest that started in late October.
The Constitutional Court last month invalidated national polls held in February and the Election Commission said this week it can’t set a date for a fresh vote yet, keeping Prime Minister Yingluck Shinawatra’s government in caretaker mode with limited ability to take steps to spur economic growth.
Government bonds rose for a third week. The yield on the 3.625 percent sovereign notes due June 2023 dropped 10 basis points from April 4 and two basis points today to 3.6%, data compiled by Bloomberg show. That’s the lowest since June.