Baht Heads for 2nd Weekly Advance as Asian Data Shows Resilience

Thailand’s baht was poised for a second weekly advance as data released this week showed Asian economies are proving resilient to Europe’s debt crisis. Government bonds rallied.

The currency strengthened for a third day after Bank of England Governor Mervyn King said yesterday the case for more stimulus in the U.K. “is growing.” U.S. consumer prices fell in May, giving the Federal Reserve more room to revive the world’s largest economy. The Philippines reported that exports increased more than economists forecast in April, while the South Korean unemployment rate fell to a four-month low of 3.2 percent in May.

“Asia’s economy remains quite solid,” said Yuji Kameoka, chief currency strategist at Daiwa Securities Co. in Tokyo. “If Europe’s crisis worsens, that will adversely impact other nations and central banks in the developed nations will take actions to support their economies.”

The baht rose 0.6 percent this week and 0.2 percent today to 31.51 per dollar as of 8:51 a.m. in Bangkok, according to data compiled by Bloomberg. It reached 31.47 earlier, the strongest level since June 11. One-month implied volatility, a measure of exchange-rate swings used to price options, was unchanged at 4.52 percent today and this week.

The Bank of Thailand held its benchmark interest rate at 3 percent on June 13. The rate is considered “very accommodative and appropriate for economic recovery,” Assistant Governor Paiboon Kittisrikangwan said the same day.

The yield on the 3.25 percent bonds due June 2017 fell three basis points, or 0.03 percentage point, this week to 3.39 percent, according to data compiled by Bloomberg. The rate advanced two basis points 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.

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