The Bank of Thailand signalled Tuesday that it won’t rush to follow up on last week’s surprise interest rate cut, despite government pressure to ease policy further. In contrast, sovereign bonds in neighboring Malaysia are expected to attract foreign interest as the government advances its fiscal reforms.
Offshore selling of Thai government bonds may extend as political risks mount and the central bank damps prospects of further interest-rate cuts.
Foreign funds have pulled over US$850 million ($1.12 billion) from baht bonds in October, set for the biggest monthly outflow since August last year, according to Thai Bond Market Association data. The trend is likely to persist with abrdn plc seeing better value in other markets, while Krungthai Bank Public Co. expects benchmark yields to stagnate between 2.4% to 2.3% through to year-end. They closed at 2.4% on Tuesday ahead of a public holiday.
