Baht Set for Weekly Gain on Flood-Insurance Inflow Speculation

Thailand’s baht was poised for its first weekly gain in three amid speculation overseas insurance companies will increase demand for the currency to pay for claims related to the nation’s worst floods in almost 70 years.

The currency gained today as the MSCI (MXAP) Asia-Pacific Index of shares snapped two weeks of declines. A drop in U.S. jobless claims to the lowest since April 2008 and an increase in consumer confidence added to signs the world’s biggest economy is weathering Europe’s debt crisis, brightening the outlook for Asia’s exports.

“Speculation about the fund inflows related to insurance payments is an underlying support for the baht,” said Kozo Hasegawa, a trader at Sumitomo Mitsui Banking Corp. in Bangkok. “More importantly this week, risk sentiment has been quite stable with no major bad news from Europe. Europe will continue to be the main factor to drive the market next week.”

The baht added 0.4 percent from a week ago and 0.1 percent today to 31.23 per dollar as of 8:17 a.m. in Bangkok, according to data compiled by Bloomberg. It touched a one-week high of 31.18 on Dec. 21. The currency may trade between 31.15 and 31.40 next week, Hasegawa said.

The Southeast Asian currency is still headed for its first annual decline since 2008, falling 4 percent, as exchange data show international investors sold $427 million more Thai equities than they bought.

The yield on the 3.25 percent debt due June 2017 added six basis points, or 0.06 percentage point, to 3.12 percent this week, according to data compiled by Bloomberg. The rate was unchanged today.

To contact the reporter on this story: Yumi Teso in Bangkok at yteso1@bloomberg.net

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net