Thailand's baht was poised for its biggest weekly advance since December 2011, and government bonds rose, as global funds increased holdings of assets that offer higher yields.
The currency touched a 17-month high on Thursday as overseas investors bought US$2.6 billion more of sovereign debt than they sold this month and purchased a net $297 million of equities, Thai Bond Market Association and stock exchange data show. The baht retreated after Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong said on Thursday that exporters will face difficulties if it strengthens further. The 10-year bond yields 3.7%, compared with 1.87% in the United States and 0.75% in Japan.
"Funds are flowing into the whole of Asia, especially Southeast Asia, and Thailand is one of the most attractive places," said Tohru Nishihama, an economist at Dai-ichi Life Research Institute Inc. in Tokyo. "It's possible to see smoothing operations to slow the pace of the appreciation, but they may not aggressively intervene to weaken the baht."
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