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Baht Weakens on Speculation Japanese Firms Sending Profits Home

The baht reached its lowest level in a week on speculation companies from Japan, the biggest foreign investor in Thailand, are sending profits home before the end of the fiscal year on March 31. Bonds advanced.

Japanese firms accounted for 64 percent of projects approved by the Thai Board of Investment in 2012, data compiled by the Japan External Trade Organization show. The baht reached its strongest level since 1997 last week and has appreciated 4.3 percent against the dollar this year, the most in Asia, as overseas investors pumped a net $9.3 billion into the nation’s debt, Thai Bond Market Association data show.

“We have a lot of Japanese companies in Thailand and this is the end of their fiscal year, so Japanese companies sending money back home puts some downward pressure on the baht,” said Pareena Phuangsiri, a Bangkok-based analyst at Kasikornbank Pcl. Inflows will continue and the baht will probably stay near the current level, she said.

The baht dropped 0.2 percent to 29.35 per dollar as of 3:12 p.m. in Bangkok, according to data compiled by Bloomberg. It touched 29.41 earlier, the lowest level since March 19. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, rose seven basis points, or 0.07 percentage point, to 5.21 percent.

Non-resident investors’ net holdings of sovereign debt accounted for 9.76 percent of the total outstanding value as of March 22, up from 8.29 percent on Dec. 28, according to Thai Bond Market Association data. The currency reached 29.08 per dollar on March 20, the strongest since July 1997.

Thai imports probably climbed 11 percent in February after surging 41 percent the previous month, while exports declined 0.2 percent after a 16 percent increase, according to median estimates in a Bloomberg survey before a government report on March 28.

The yield on the government’s 3.625 percent bonds due June 2023 fell one basis point to 3.53 percent, the lowest level since Nov. 28, data compiled by Bloomberg show.

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