Thai Baht Retreats From 16-Year High as Gains Judged Excessive

Thailand’s baht fell, retreating from a 16-year high, as technical indicators signaled a possible rebound in the dollar. Government bonds fell for a second day.

The U.S. currency’s 14-day relative strength index has stayed below 30 since April 16, the threshold that suggests to some traders the baht’s 6.4 percent rally against the dollar in 2013 was excessive. Central bank Governor Prasarn Trairatvorakul said April 19 the Thai currency has started to move beyond its fundamentals, and Assistant Governor Paiboon Kittisrikangwan said today the baht rose “too much and too quickly.”

“It seems to be a technical rebound in the dollar,” said Nalin Chutchotitham, a Bangkok-based analyst at Kasikornbank Pcl. “The governor’s comments last Friday also suggest there’s a bit of change in his view on the baht, as he previously said the baht moved in line with growth.”

The baht dropped 0.2 percent to 28.74 per dollar as of 3:12 p.m. in Bangkok, according to data compiled by Bloomberg. It touched 28.56 today and on April 19, the strongest level since a devaluation in July 1997 that sparked the Asian financial crisis. If the baht strengthens beyond 28.50, policy makers may “have to intervene a bit,” Nalin said.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, increased nine basis points, or 0.09 percentage point, to 5.37 percent.

Overseas investors bought $2 billion more Thai sovereign debt than they sold this month through April 19, adding to net purchases of $9.8 billion in the first quarter.

The yield on the 3.625 percent government bonds due June 2023 rose two basis points to 3.41 percent, data compiled by Bloomberg show.

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