Baht gains on junta spending pledge

The baht was the best-performing Asian currency this week as the junta pledged to boost spending to revive economic growth.

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region's 10 most-active currencies excluding the yen, was steady for the week, erasing a decline after the European Central Bank (ECB) cut interest rates to negative on Thursday, potentially spurring fund flows to emerging-market assets. Thailand's military administration, which took over in a May 22 coup, promised to step up infrastructure development and increase investment in areas adjacent to the nations borders.

''The perception is that the new Thailand government has provided stability and improved conditions for growth,'' said Dariusz Kowalczyk, a Hong Kong-based strategist at Credit Agricole CIB. ''The ECB's stimulus programme is positive for high- yielding currencies such as those in Asia,'' he said.

The baht appreciated 0.8% this week, the most since February, to 32.580 per dollar as of 10.52am, according to data compiled by Bloomberg. The Philippine peso rose 0.1% to 43.69, while the rupiah fell 1.5% to 11,856 and Malaysia's ringgit declined 0.3% to 3.2240.

Foreign funds pumped US$523 million (17 billion baht) into Thai stocks and local-currency sovereign bonds in the first four days of the week, exchange data show. The junta plans to speed up investment in a dual-track train project and promote economic development zones near borders with Malaysia, Myanmar and Laos, air force commander ACM Prachin Juntong, the head of economic affairs, told reporters on Sunday.

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