Thai Baht Set for Second Weekly Drop on Intervention Concern

Thailand’s baht was poised for a second weekly decline amid concern the central bank will intervene to halt appreciation that may hurt exporters. Bonds fell as the stock index reached its highest level since 1994.

The baht advanced 2.5 percent against the dollar this year, the best performance in Asia, as official data showed global funds purchased more than $5 billion of sovereign debt and equities than they sold during the period. The currency has started to stabilize after strengthening earlier in 2013, Bank of Thailand Governor Prasarn Trairatvorakul said yesterday. The central bank is ready to take measures “if the baht is distorted,” he said Jan. 31.

“There’s been some correction in the baht after quite a sharp rally this year, while there remains intervention concern,” said Tsutomu Soma, manager of the investment trust and fixed-income business unit at Rakuten Securities Inc. in Tokyo. “Funds will continue to flow into Asia where growth is solid. For bonds, it’s natural to think domestic investors are shifting funds to stocks that have really performed strongly.”

The baht slipped 0.1 percent this week to 29.83 per dollar as of 8:53 a.m. in Bangkok, according to data compiled by Bloomberg. The currency rose 0.1 percent today.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, dropped 25 basis points, or 0.25 percentage point, to 5.35 percent from a week ago. The rate climbed three basis points today.

Official data on Feb. 18 may show gross domestic product increased 15.4 percent in the fourth quarter from a year earlier and 5.5 percent in 2012, according to the median estimate of economists in separate Bloomberg surveys.

The yield on the 3.625 percent government bonds due June 2023 rose eight basis points this week to 3.63 percent, data compiled by Bloomberg show. The measure was little changed today.

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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