Baht Falls on Speculation Importers Will Buy Dollars; Bonds Drop

Thailand’s baht declined for the first time in four days on speculation importers will buy dollars, taking advantage of the local currency’s recent rally. Government bonds fell.

The baht rose last week as global funds bought $160 million more Thai bonds than they sold in two days through June 14 and poured a net $50 million into equities, official data show. Bank of Thailand Governor Prasarn Trairatvorakul said June 13 the authority is taking measures to smooth volatility in the baht and sold “a certain amount of dollars.” The Federal Open Market Committee starts a two-day policy meeting tomorrow amid concern the U.S. central bank will taper bond purchases that have fueled demand for emerging-market assets.

“There is some demand from importers for the dollar while exporters try to wait and see as the baht has been weakening,” said Disawat Tiaowvanich, a foreign-exchange trader at Bangkok Bank Pcl. (BBL) “We probably won’t see much volume as people take a wait-and-see stance before the FOMC this week.”

The baht lost 0.3 percent to 30.65 per dollar as of 9:44 a.m. in Bangkok, data compiled by Bloomberg show. The currency reached 30.44 on June 14, the strongest level since June 5. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, rose nine basis points, or 0.09 percentage point, to 7.1 percent.

The yield on the 3.625 percent government bonds due June 2023 increased four basis points to 3.71 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: James Regan at jregan19@bloomberg.net

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