Thai Baht Snaps Three-Day Rally as Central Bank May Limit Gains

Thailand’s baht fell, snapping a three-day rally, on speculation the central bank will intervene to slow gains that may hurt exports. Bonds were steady.

The Bank of Thailand will monitor capital flows, it said yesterday after keeping the benchmark interest rate unchanged at 2.75 percent. The baht touched a 10-month high on Jan. 3 as overseas investors bought 9.9 billion baht ($327 million) more local stocks than they sold this year through yesterday and pumped a net $1.3 billion into sovereign notes, data from the stock exchange and the Thai Bond Market Association show.

“Emerging-market currencies, especially in Asia, have been strengthening versus the dollar with fund inflows to the region,” said Tsutomu Soma, manager of the investment trust and fixed-income business unit at Rakuten Securities Inc. in Tokyo. “The central bank will not try to reverse the trend but may want to slow the pace of appreciation.”

The baht slipped 0.1 percent to 30.39 per dollar as of 8:45 a.m. in Bangkok, according to data compiled by Bloomberg. It reached 30.29 on Jan. 3, the strongest level since March 1, 2012, and has risen 0.6 percent this year, the biggest advance among the 11 most-traded Asian currencies.

One-month implied volatility, a measure of expected moves in exchange rates used to price options, dropped three basis points, or 0.03 percentage point, to 4.07 percent.

Exports, which account for about two-thirds of Southeast Asia’s second-largest economy, climbed 27 percent in November from a year earlier, after increasing 14 percent the previous month, official data showed.

While weakness in Europe and Japan persists, there is a broad-based recovery in Thai overseas sales and the performance of Asian economies has turned positive, the central bank said yesterday. A stronger currency makes Thai goods more expensive for overseas buyers relative to its rivals.

The yield on the 3.625 percent government bonds due June 2023 was little changed at 3.68 percent, data compiled by Bloomberg show.

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

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.