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Baht Falls From Near 17-Month High Amid Intervention Concern

Jan. 23 (Bloomberg) -- Thailand’s baht weakened for a third day, retreating from near a 17-month high, as speculation grew the central bank will intervene to halt gains that will hurt exports. Government bonds were steady.

Finance Minister Kittiratt Na-Ranong said today that the baht’s recent strength was caused by short-term inflows and speculation, and said it may weaken as companies boost imports as part of government infrastructure investments. Central bank Governor Prasarn Trairatvorakul said yesterday volatile capital flows are the main threat to growth, and the monetary authority is ready to act should there be “unusual movement.” The currency advanced 2.7 percent in the past month, the best performance among 25 emerging currencies in the world.

“Dealers and investors seem sensitive to intervention risks as some central banks in Asia, including Thailand, show concern about rapid appreciation,” said Tohru Nishihama, an economist at Dai-ichi Life Research Institute Inc. in Tokyo. “With pretty good risk sentiment, funds have been flowing into the region and that is helping boost currencies.”

The baht fell 0.2 percent to 29.82 per dollar as of 3:18 p.m. in Bangkok, according to data compiled by Bloomberg. It touched 29.69 earlier, within 0.1 percent of its strongest level since August 2011 reached on Jan. 21. One-month implied volatility, a measure of expected moves in exchange rates used to price options, held steady at 4.32 percent.

Global funds bought $3.4 billion more sovereign notes than they sold this month through yesterday and poured a net $409 million into local equities, Thai Bond Market Association and stock exchange data show.

Exports, which account for about two-thirds of Thailand’s economy, climbed 13 percent in December after an increase of 27 percent the previous month, according to a government report today.

The yield on the 3.125 percent government bonds due December 2015 was little changed at 2.95 percent, data compiled by Bloomberg show.

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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