Baht Set for Weekly Gain as ECB Bond Plan Increases Risk-Taking

Thailand’s baht was poised for a weekly advance after the European Central Bank announced a bond- buying plan to tackle the region’s debt crisis, increasing demand for emerging-market assets.

The currency touched its strongest level since May today as international investors bought $35 million more Thai equities than they sold this week through yesterday and pumped a net $646 million into government bonds, according to data from the stock exchange and the Thai Bond Market Association. ECB President Mario Draghi said yesterday policy makers agreed to an unlimited bond-purchase program to regain control of interest rates in the euro area. The U.S. will release employment data today.

“The ECB taking action leads to optimism about stability in the euro-area financial markets,” said Kozo Hasegawa, a Bangkok-based currency trader at Sumitomo Mitsui Banking Corp. “That improved risk sentiment and encouraged fund inflows to risker assets, supporting emerging currencies. Investors are now waiting for the U.S. jobs data.”

The baht, unchanged today, strengthened 0.4 percent this week to 31.21 per dollar as of 8:29 a.m. in Bangkok, according to data compiled by Bloomberg. It touched 31.15 today and on Sept. 4, matching an Aug. 24 level that was the strongest since May 11. One-month implied volatility, a measure of exchange-rate swings used to price options, was steady today and this week at 4.27 percent.

The yield on the 3.25 percent bonds due June 2017 declined one basis point, or 0.01 percentage point, to 3.21 percent, according to data compiled by Bloomberg. The rate was little changed this week.

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

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net.

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