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Baht Rises to 17-Month High as Central Bank Says Won’t Step In

Jan. 16 (Bloomberg) -- Thailand’s baht advanced for an eighth day, touching the highest level since August 2011, after central bank Governor Prasarn Trairatvorakul ruled out intervention if the currency continues to move on fundamentals.

The Bank of Thailand isn’t concerned by the baht’s strength, caused by the risk-on sentiment, as it has moved in line with regional currencies, Prasarn said Jan. 14. Consumer prices rose 3.63 percent in December, the most since November 2011, official data showed Jan. 2. The baht traded below 30 per dollar for the first time in 16 months as global funds bought $2 billion more government debt than they sold this month through yesterday and poured a net $254 million into equities, stock exchange and Thai Bond Market Association data show.

“The central bank may allow gains in the currency that will help ease inflation unless the speed of appreciation is too fast,” said Yuji Kameoka, chief currency strategist at Daiwa Securities Co. in Tokyo. “With the risk-on mood in the market, funds are flowing into the region.”

The baht strengthened 0.7 percent to 29.81 per dollar as of 3:19 p.m. in Bangkok after reaching 29.79 earlier, the most since Aug. 10, 2011, according to data compiled by Bloomberg. The currency’s winning stretch is the longest since March 2011.

One-month implied volatility, a measure of expected moves in exchange rates used to price options, dropped five basis points, or 0.05 percentage point, to 4.15 percent.

The yield on the 3.125 percent government bonds due December 2015 held at 2.94 percent, data compiled by Bloomberg show. Thailand sold 14.5 billion baht ($486 million) of bonds due 2023 and 6 billion baht of debt due 2061 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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