Thai Baht Trades Near Two-Week Low on Intervention Speculation

Thailand’s baht traded within 0.4 percent of a two-week low amid concern the central bank will seek to curb appreciation that threatens exports. Bonds gained.

The baht, Asia’s best-performing currency this year, rose 4.1 percent since Dec. 31 and touched a 16-year high last month. February’s 5.8 percent decline in exports was partly caused by exchange-rate strength, Finance Minister Kittiratt Na-Ranong said yesterday in Brunei. The International Monetary Fund will contribute about 1 billion euros ($1.3 billion) as part of a financial rescue program for Cyprus, IMF Managing Director Christine Lagarde said yesterday.

“Concern about intervention seems to be growing as the baht has come quite far while export is an important part of the Thai economy,” said Hideki Hayashi, a researcher at the Japan Center for Economic Research in Tokyo. “Europe’s debt concern is not completely wiped out, and that’s providing some excuse for a correction in the baht.”

The baht was little changed at 29.38 per dollar as of 3:10 p.m. in Bangkok from 29.37 yesterday, according to data compiled by Bloomberg. The currency reached 29.48 yesterday, the weakest level since March 19. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, dropped seven basis points, or 0.07 percentage point, to 5.15 percent.

Kittiratt and the Bank of Thailand said yesterday policy makers are monitoring capital flows and the exchange rate.

Government bonds rose as official data showed global funds purchased $175 million more local sovereign debt than they sold in the first three days of this week, adding to net purchases of $9.6 billion in the first quarter.

The yield on Thailand’s 3.625 percent notes due June 2023 fell two basis points to 3.52 percent, the lowest level since March 28, according to data compiled by Bloomberg. It has averaged 3.63 percent this year.

“Inflows into the bond market are quite large and provide support for the baht,” Hayashi said.

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