Market Summary

Yield Movements

Between 1 June and 31 August, Thailand’s local currency (LCY) government bond yields rose for all maturities except the 20-year tenor, which fell slightly. The increase in bond yields was primarily driven by the Bank of Thailand’s (BOT) continued monetary policy tightening. The BOT has raised its benchmark policy rate by a total of 100 basis points since January to keep inflation in check amid a sustained domestic economic recovery. Heightened risks, driven by a delay in the formation of a new government following the general election in May, also contributed to the uptick in bond yields.

Local Currency Bond Market Size and Issuance

Thailand’s LCY bond market reached a size of THB16.3 trillion at the end of June. Overall growth moderated to 1.9% quarter-on-quarter in the second quarter of 2023, driven by slower expansions in Treasury and other government bonds due to a relatively high volume of maturities. Issuance of new LCY bonds rose 7.1% quarter-on-quarter to THB2.5 trillion in the second quarter of 2023 amid continued economic recovery. 

Policy and Regulatory Developments

On 27 June, the BOT announced plans to further ease foreign exchange rules to help individuals and companies manage exchange rate risks. The BOT foresees that the Thai baht will remain volatile in the short run due to external factors. The central bank will double the threshold for direct overseas investment in equities for individuals to USD10 million annually. The BOT will also raise the amount allowed for cross-border money transfers from USD50,000 to USD200,000. Furthermore, the central bank will relax the rules for Thai units of foreign companies to send money to parent companies. The measures are scheduled to be implemented starting in the third quarter of 2023.