Baht Little Changed Near Four-Week High Before Policy Decisions

Thailand’s baht was little changed as the market waited to see if the Federal Reserve and the European Central Bank will take measures to spur their economies. Government bonds advanced.

The MSCI Asia Pacific Index (MXAP) of shares snapped a four-day advance before policy decisions from the Fed today and the ECB tomorrow. A central bank report yesterday showed Thai imports increased 5 percent in June from a year earlier, while exports dropped 4.3 percent. The baht touched a four-week high of 31.45 yesterday as foreign funds bought $88 million more local shares in the first two days of the week, exchange data show.

“You don’t expect to see a major one-way move before those big decisions,” said Hideki Hayashi, a researcher at the Japan Center for Economic Research in Tokyo. “We can expect importer demand with the baht hovering around the recent high, while there’s some fund inflows into stocks amid speculation the ECB will come up with something.”

The baht traded at 31.48 per dollar as of 3:23 p.m. in Bangkok, compared with 31.49 yesterday, according to data compiled by Bloomberg. One-month implied volatility, a measure of exchange-rate swings used to price options, was little changed at 4.51 percent.

The Fed is not expected to announce a third round of large- scale asset purchases today, according to the median estimate of economists surveyed by Bloomberg. The jobless rate in the euro area reached 11.2 percent in June, matching May’s record high, according to official data yesterday.

The yield on the 3.25 percent bonds due June 2017 fell two basis points, or 0.02 percentage point, to 3.17 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.