Baht hits eight-month high, bonds rise

The baht climbed to an eight-month high and sovereign bonds rose as global funds bought Thai assets on optimism government spending will revive growth.

The currency rose as much as 0.3% to 31.828 per dollar, the strongest since Nov 25, before trading at 31.837 at 9:22 am in Bangkok. The baht’s 1.9% advance in July is the second best among 24 emerging-market exchange rates tracked by Bloomberg.

The gains pushed a measure of investor bullishness on the currency to strongest in more than a year.

Thailand’s economy, which shrank in the first quarter, can return to growth rates of between 5% and 6% as the military government’s policies help “jump start” expansion, Pridiyathorn Devakula, a former finance minister and an adviser to NCPO leader  rayuth Chan-Ocha, said yesterday. Exports rose 7.2% last month from a year earlier, the first increase in four months, Gen Prayuth said July 18.

“It seems that the junta is at least providing some stability for the economic outlook,” said Jonathan Cavenagh, a currency strategist at Westpac Banking Corp. in Singapore. “Measures of consumer and business confidence have been tracking higher, so that’s probably giving the market a bit more confidence.”

An index of consumer confidence rose to 75.1 in June, the highest since October, according to a July 3 release from the University of the Thai Chamber of Commerce.

The yield on the 3.875% government bonds due June 2019 slipped one basis point, 0.01 percentage point, to 3.02%, the lowest level since May 21.

Fund Inflows

Global investors poured a net $331.6 million into Thai debt and equities on Monday, taking this month’s inflows to $3.31 billion, according to a data compiled by Bloomberg. The benchmark SET Index rose 0.3% Monday to close at the highest level since June 4, 2013.

Foreign funds have plowed money into Thai stocks and bonds as the junta accelerates state spending to revive the economy. The National Council for Peace and Order, a group of military leaders, will consider the transport ministry’s infrastructure investment plan Tuesday, Soithip Trisuddhi, the ministry’s permanent secretary, said Monday without giving details.

The government said last month it plans to spend 2.4 trillion baht ($75 billion) to build and expand networks such as highways, railways and airports between 2015 and 2022.

The baht’s 14-day relative strength index is at 21.74, the lowest since April 2013, according to Bloomberg data, suggesting an imminent reversal.

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