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Baht Falls to Near 1-Month Low as Importers Boost Dollar Buying

March 22 (Bloomberg) -- Thailand’s baht dropped toward a one-month low on speculation importers stepped up dollar demand to source machinery for factories swamped by floods last year.

A government report will show next week that imports increased 6.1 percent in February after falling 4.2 percent the previous month, according to the median estimate of economists in a Bloomberg survey. The baht has gained 2.5 percent this year as global investors poured $2.4 billion into local equities and $10 billion into government debt, stock exchange and the Thai Bond Market Association data show.

“There seems to be some demand for the dollar to import machines to rebuild factories, offsetting the impact from fund inflows,” said Satoshi Ushijima, vice president of the treasury division in Bangkok at Mizuho Corporate Bank Ltd. “The baht is quite directionless this week and has been stuck near the current area.”

The baht declined 0.1 percent to 30.79 per dollar as of 3:21 p.m. in Bangkok, according to data compiled by Bloomberg. It reached 30.87 on March 15, the weakest level since Feb. 17.

One-month implied volatility, a measure of exchange-rate swings used to price options, was unchanged at 6.525 percent.

The baht extended losses after HSBC Holdings Plc and Markit Economics reported that an index showed China’s manufacturing will shrink for a fifth straight month in March. That data weighed on sentiment toward the baht, said Frances Cheung, a strategist at Credit Agricole CIB in Hong Kong.

Thailand’s government would like to see lower interest rates and a weaker currency to help exporters cope with higher energy costs, Finance Minister Kittiratt Na-Ranong said today. The range between 32 per dollar and 34 per dollar would “be very good,” he told Bloomberg Television in Hong Kong.

The yield on the government’s 3.25 percent bonds due June 2017 declined one basis point, or 0.01 percentage point, to 3.64 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.

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