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Baht Touches One-Week Low on Concern Central Bank to Curb Gains

Feb. 11 (Bloomberg) -- Thailand’s baht fell to a one-week low on speculation the central bank will act to stem capital inflows that fueled a 2.5 percent rally in the currency this year, Asia’s biggest exchange-rate gain. Bonds fell.

Overseas investors have bought $1.2 billion more sovereign notes than they sold this month through Feb. 8, Thai Bond Market Association data show. Finance Minister Kittiratt Na-Ranong said on Jan. 31 there’s concern the strong baht, which has rallied 2.5 percent against the dollar this year, will hurt tourism and exports. The Bank of Thailand may unveil measures to curb foreign inflows at a meeting on Feb. 20, according to Disawat Tiaowvanich, a currency trader at Bangkok Bank Pcl.

“There’s demand for the dollar against the baht because the market is cautious that the central bank may do something to slow down the capital inflows,” Tiaowvanich said. “That’s why the Thai baht hasn’t moved on the strong side these days.”

The baht fell 0.2 percent to 29.84 per dollar as of 3:10 p.m. in Bangkok, according to data compiled by Bloomberg. The currency touched 29.94 earlier, the weakest level since Feb. 1. One-month implied volatility, a measure of expected moves in exchange rates used to price options, fell 13 basis points, or 0.13 percentage point, to 5.47 percent.

Overseas shipments, which account for about two-thirds of Southeast Asia’s second-largest economy, rose 14 percent in December after a 27 percent increase the previous month, official data showed on Jan. 31.

The yield on the 3.625 percent government bonds due June 2023 advanced one basis point to 3.56 percent, halting seven days of declines, data compiled by Bloomberg show.

To contact the reporter on this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net

To contact the editor responsible for this story: Anil Varma at avarma3@bloomberg.net

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