Thai Baht Erases Post-Coup Loss as Junta Ends Months of Protests

Thailand’s baht rose, erasing its

losses since a May 22 coup, as an end to seven months of street

protests and a planned pickup in government spending help

attract overseas funds to the nation’s assets.

Military rulers led by Army Chief Prayuth Chan-Ocha

suspended the constitution and used powers under martial law to

ban political activities. At the same time, they have vowed to

accelerate budget spending and restarted payments to farmers

under a disputed rice-purchase program. Global funds pumped $561

million into Thai stocks and bonds this month through yesterday,

after pulling $2.24 billion out in May, exchange data show.

“With the military coup, the perception is there’s a bit

of stabilization,” said Vishnu Varathan, a senior economist at

Mizuho Bank Ltd. in Singapore. “At least there’s not going to

be an immediate, imminent and uncontrollable bloodshed on the

streets. That I think led to a bit of a buyback opportunity”

for the baht, he said.

The baht rose 0.2 percent to 32.388 per dollar as of 12:20

p.m. in Bangkok, headed for a 0.3 percent weekly advance,

according to data compiled by Bloomberg. The currency had traded

at 32.40 immediately prior to the May 22 coup. The SET Index of

shares gained 0.3 percent, while the yield on 10-year government

bonds increased one basis point to 3.86 percent.

One-month implied volatility, a measure of expected

exchange-rate moves used to price options, dropped 23 basis

points to 5.15 percent. The gauge declined 42 basis points this

week.

Forecast Recovery

The Thai economy will start to recover this quarter and

gain more momentum in the three months through September as

local demand improves in line with easing political concerns,

Don Nakornthab, director for Bank of Thailand’s macroeconomic

policy, told reporters in Bangkok on June 10.

Gross domestic product fell 0.6 percent in the first

quarter from a year earlier, compared with the median estimate

in a Bloomberg survey for a 0.4 percent increase. The economy

shrank 2.1 percent from the previous three months.

Thailand’s monetary policy is accommodative and will help

support the nation’s economic recovery, central bank Governor

Prasarn Trairatvorakul told reporters yesterday. The Bank of

Thailand, which has cut the benchmark interest rate three times

in the past year to 2 percent, will next review borrowing costs

on June 18.

To contact the reporter on this story:

Lilian Karunungan in Singapore at

lkarunungan@bloomberg.net

To contact the editors responsible for this story:
James Regan at

jregan19@bloomberg.net

Simon Harvey

Thai Baht Erases Post-Coup Loss as Junta Ends Months of Protests