Bank of Thailand shoring up bond market with cash injection

The Bank of Thailand (BOT) announced on Thursday that they have bought 100 billion baht worth of Thai government bonds between March 13 and March 19 to stabilize the bond market.  

Mathee Supapongse, deputy governor of monetary stability office at the central bank said after the market closed on Thursday that the Thai bond market has been fluctuating because of the panic in the global financial market. 

This is why the BOT has been injecting liquidity into the Thai bond market by buying up government bonds. Mathee said that the central bank bought 45 billion baht worth of bonds on Thursday alone.

Mathee added that the bank will also lower the ceiling for bond purchases to increase more liquidity into the bond market. He stressed that the central bank is willing to continue to buy up bonds to help stabilized the market. 

The 10-year government bond yield fell to a historical low of 1 per cent on February 28 as investors are buying up non-risky assets amid the outbreak of the coronavirus. The yield has recovered to 1.81 per cent on Thursday. 

At the same time, brokers are expecting the central bank to lower the country’s benchmark lending rate by another 25-50 basis points during the first half of this year. The BOT’s Monetary Policy Committee (MPC) will meet on the rates on March 25. 

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