Thai cenbank buys $1.4 billion of bonds to boost liquidity

 

FILE PHOTO: Thailand's central bank is seen at the Bank of Thailand in Bangkok, Thailand April 26, 2016. REUTERS/Jorge Silva/File Photo

 

BANGKOK (Reuters) - Thailand's central bank bought another 45 billion baht ($1.38 billion) of bonds on Thursday and is ready to continue to buy them to ensure sufficient liquidity and to reduce market volatility, a deputy governor said.

 

In the March 13-19 period, the central bank purchased more than 100 billion baht of bonds, Deputy Governor Mathee Supapongse said in a statement on Thursday.

 

The central bank also plans to cut the amount of its bond auctions to help boost liquidity, he said.

 

Given high volatility in the Thai debt market, "the central bank has purchased both short and long-tem government bonds", Mathee said.

 

-- © Copyright Reuters 2020-03-19

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Does anyone know - is this normal? If not, when was the last time the BOT has to add liquidity to the bond market?

4 minutes ago, timendres said:

Does anyone know - is this normal? If not, when was the last time the BOT has to add liquidity to the bond market?

Bond auctions are usually oversubscribed every time but most recently BOT has cancelled them in order to lower FDI and to weaken THB. In the present environment I imagine there will be a near total absence of foreign buyers so I guess BOT will have stepped into the frame. The purchase was of government bonds which is the vast majority, as I recall foreign buyers represent 17% of total bond holdings so it looks like domestic buyers are not buying either.

3 minutes ago, saengd said:

Bond auctions are usually oversubscribed every time but most recently BOT has cancelled them in order to lower FDI and to weaken THB. In the present environment I imagine there will be a near total absence of foreign buyers so I guess BOT will have stepped into the frame. The purchase was of government bonds which is the vast majority, as I recall foreign buyers represent 17% of total bond holdings so it looks like domestic buyers are not buying either.

This is along the lines of what I was thinking. Any idea the last time this was required?

18 minutes ago, timendres said:

This is along the lines of what I was thinking. Any idea the last time this was required?

I don't know, sorry. I understand why foreign investors have bailed out into USD cash but it looks as though domestic buyers may have done similar, especially since they have abandoned the SET as well. I guess some domestic bond holders may have been forced to sell to meet SET margin calls.

Edited March 20, 20206 yr by saengd

Just reading that Foreign Currency Reserves are down USD 7 Bill. on the week to USD 229 bill., as a result of bond buying and markets intervention. Foreign buyers pulled USD 4.6 bill. from the Thai bond market in a rush for cash, 10 year bond yields have doubled in a week to almost 1.7%. Info. per the newspaper that cannot be named, not new news but now the numbers are more clear.

 

Looks like investors going into cash, especially USD, Thai buyers liquidating to pay margin calls and no new buyers emerging, except BOT.