Baht Falls on Bernanke Remarks, Speculation Gains Were Excessive

Thailand’s baht dropped by the most in four months as a technical gauge that traders use to predict price swings signaled the dollar is poised to rebound.

The Thai currency retreated from its strongest level in more than five months after Federal Reserve Chairman Ben S. Bernanke’s remarks to Congress damped expectation of more quantitative easing to boost the world’s largest economy. The dollar’s 14-day relative strength index against the baht yesterday slid below the 30 threshold that suggests its decline will reverse.

“We have seen quite a fast appreciation recently and investors probably wanted to take profits anyway,” said Kozo Hasegawa, a trader at Sumitomo Mitsui Banking Corp. in Bangkok. “Bernanke’s comments encouraged some buy-back of dollars.”

The baht slumped 0.7 percent to 30.46 per dollar as of 9 a.m. in Bangkok, according to data compiled by Bloomberg. The currency touched 30.21 yesterday, the strongest level since Sept. 15. Hasegawa said he expects it will trade between 30.10 and 30.60 until the end of next week.

Bernanke said yesterday there are “positive developments” in the U.S. labor market, adding that “the job market remains far from normal.”

Government bonds were little changed before a government report today that may show inflation accelerated to 3.5 percent in February from a 10-month low of 3.38 percent the previous month, according to the median forecast of economists in a Bloomberg survey. Data is due 11:30 a.m. local time. The yield on the 3.25 percent notes due June 2017 was steady at 3.41 percent, according to data compiled by Bloomberg.

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.

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