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Baht Falls on Bernanke Remarks, Speculation Gains Were Excessive

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March 1 (Bloomberg) -- Thailand’s baht dropped by the most since January 2011 as a technical gauge that traders use to predict price swings signaled the dollar is poised to rebound.

The Thai currency retreated from its strongest level in more than five months after Federal Reserve Chairman Ben S. Bernanke’s remarks to Congress damped expectation of more quantitative easing to boost the world’s largest economy. The dollar’s 14-day relative strength index against the baht yesterday slid below the 30 threshold that suggests its decline will reverse.

“We have seen quite a fast appreciation recently and investors probably wanted to take profits,” said Kozo Hasegawa, a trader at Sumitomo Mitsui Banking Corp. in Bangkok. “Bernanke’s comments encouraged some buy-back of dollars.”

The baht slumped 1 percent to 30.55 per dollar as of 3:12 p.m. in Bangkok, according to data compiled by Bloomberg. The currency touched 30.21 yesterday, the strongest level since Sept. 15. Hasegawa said he expects it will trade between 30.10 and 30.60 until the end of next week.

Bernanke said yesterday there are “positive developments” in the U.S. labor market, adding that “the job market remains far from normal.”

“Profit taking in Asian currencies and buying back of the dollar versus the baht is the key factor,” said Nalin Chutchotitham, a Bangkok-based analyst at Kasikornbank Pcl.

Government bonds were unchanged after official data today showed inflation slowed for a third consecutive month in February. An index of consumer prices climbed 3.35 percent from a year earlier, the Ministry of Commerce said today, compared with a 3.38 percent increase reported earlier for January. The yield on the 3.25 percent notes due June 2017 was steady at 3.41 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: Sandy Hendry at shendry@bloomberg.net.