Thai Baht Stalls Near 17-Month High as Gains Judged Excessive

Thailand’s baht traded near its 17-month high after a technical indicator signaled a possible rebound in the U.S. dollar and amid growing speculation the central bank will halt gains that hurt exports.

The dollar’s 14-day relative strength index against the baht was at 17 today, below the 30 threshold that signals to some traders appreciation in the baht will reverse. Bank of Thailand Governor Prasarn Trairatvorakul said today volatile capital flows are the main threat to economic growth this year, adding that should there be “unusual movement,” it is ready to take action. Finance Minister Kittiratt Na-Ranong said Jan. 17 the exchange rate is “not at a good level” and exporters will face difficulties should it strengthen further.

“There seems to be a growing concern about intervention and we see some correction downward from a recent sharp appreciation,” said Hideki Hayashi, a researcher at the Japan Center for Economic Research in Tokyo. “The basic trend hasn’t changed and capital inflows to Asia will continue to be supportive for their currencies.”

The baht traded at 29.73 per dollar as of 3:07 p.m. in Bangkok from 29.74 yesterday, according to data compiled by Bloomberg. The currency touched 29.66 yesterday, the strongest level since August 2011. One-month implied volatility, a measure of expected moves in exchange rates used to price options, held steady at 4.32 percent.

Exports, which account for about two-thirds of Southeast Asia’s second-largest economy, climbed 21 percent in December after an increase of 27 percent the previous month, according to the median estimate of economists in a Bloomberg survey before a government report tomorrow.

The yield on the 3.125 percent government bonds due December 2015 rose one basis point, or 0.01 percentage point, to 2.95 percent, compiled by Bloomberg show.

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