Thai Baht Falls From 17-Month High as Gains Judged Excessive

Thailand’s baht dropped by the most in more than two weeks after a technical indicator signaled a possible rebound in the U.S. dollar and amid growing speculation the central bank will halt gains that hurt exports.

The dollar’s 14-day relative strength index against the baht was at 17 yesterday, below the 30 threshold that signals to some traders appreciation in the baht will reverse. Finance Minister Kittiratt Na-Ranong said Jan. 17 the exchange rate is “not at a good level” and exporters will face difficulties should it strengthen further. Bank of Thailand Governor Prasarn Trairatvorakul said the same day that capital inflows to short- term securities were driving the currency higher and the central bank is “closely watching” the situation.

“There seems to be a growing concern about intervention and we see some correction downward from a recent sharp appreciation,” said Hideki Hayashi, a researcher at the Japan Center for Economic Research in Tokyo. “The basic trend hasn’t changed and capital inflows to Asia will continue to be supportive for their currencies.”

The baht fell 0.4 percent, the most since Jan. 4, to 29.86 per dollar as of 8:34 a.m. in Bangkok, according to data compiled by Bloomberg. The currency touched 29.66 yesterday, the strongest level since August 2011. One-month implied volatility, a measure of expected moves in exchange rates used to price options, declined three basis points, or 0.03 percentage point, to 4.3 percent.

Exports, which account for about two-thirds of Southeast Asia’s second-largest economy, climbed 21 percent in December after an increase of 27 percent the previous month, according to the median estimate of economists in a Bloomberg survey before a government report later this month.

The yield on the 3.125 percent government bonds due December 2015 was little changed at 2.94 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

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