Thai Baht Snaps Three-Day Rally as Central Bank May Limit Gains

Thailand’s baht halted a three-day rally on speculation the central bank will intervene to slow gains that may hurt exports. Bonds were steady.

The Bank of Thailand will monitor capital flows, it said yesterday after keeping the benchmark interest rate unchanged at 2.75 percent. The baht touched a 10-month high on Jan. 3 as overseas investors bought 9.9 billion baht ($326 million) more local stocks than they sold this year through yesterday and pumped a net $1.3 billion into sovereign notes, data from the stock exchange and the Thai Bond Market Association show.

“Emerging-market currencies, especially in Asia, have been strengthening versus the dollar with fund inflows to the region,” said Tsutomu Soma, manager of the investment trust and fixed-income business unit at Rakuten Securities Inc. in Tokyo. “The central bank will not try to reverse the trend but may want to slow the pace of appreciation.”

The baht traded at 30.38 per dollar as of 3:06 p.m. in Bangkok from 30.37 yesterday, according to data compiled by Bloomberg. It reached 30.29 on Jan. 3, the strongest level since March 1, 2012, and has risen 0.7 percent this year, the third-biggest advance among the 11 most-traded Asian currencies after the Malaysian ringgit and the Philippine peso.

One-month implied volatility, a measure of expected moves in exchange rates used to price options, held steady at 4.1 percent.

Exports, which account for about two-thirds of Southeast Asia’s second-largest economy, climbed 27 percent in November from a year earlier, after increasing 14 percent the previous month, official data showed.

While weakness in Europe and Japan persists, there is a broad-based recovery in Thai overseas sales and the performance of Asian economies has turned positive, the central bank said yesterday. A stronger currency makes Thai goods more expensive for overseas buyers relative to its rivals.

The yield on the 3.125 percent government bonds due December 2015 was little changed at 2.94 percent, data compiled by Bloomberg show.

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