Baht Gains Most in a Month as Concern About Capital Curbs Eases

Thailand’s baht rose the most in a month amid easing concern policy makers will curb capital inflows that drove the currency to a 16-year high last month.

Finance Minister Kittiratt Na-Ranong said yesterday that the baht is now more stable, adding he prefers an interest-rate cut as an “easy measure” to temper exchange-rate strength. The Cabinet discussed yesterday four measures proposed by the Bank of Thailand aimed at slowing inflows and baht gains, the Bangkok Post newspaper reported today, citing a member of parliament who attended the meeting.

“The market has been waiting for any announcement on capital measures,” said Wee-Khoon Chong, a Hong Kong-based strategist at Societe Generale SA. “But for now, no announcement is likely.”

The baht climbed 0.6 percent to 29.38 per dollar as of 4:14 p.m. in Bangkok, the most since April 9, according to data compiled by Bloomberg. The currency appreciated 0.5 percent yesterday from May 3. Onshore financial markets were closed Monday for a public holiday. The currency reached 29.74 on May 3, the weakest level since March 12.

It advanced 4.1 percent this year, the best performance among Asia’s 11 most-traded currencies, and reached 28.56 on April 22 and April 19, the strongest since July 1997.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, dropped 10 basis points, or 0.10 percentage point, to 6.19 percent.

Foreign Investment

The Cabinet seeks more frequent updates from the central bank, Varathep Rattanakorn, a minister in the Prime Minister’s Office, told reporters in Bangkok today, without giving details. The government should limit overseas investment in domestic bonds to maturities of less than six months, Paiboon Nalinthrangkurn, chairman of the Federation of Thai Capital Organizations, a trade group, said on May 3.

Foreign investors bought $145 million more sovereign debt than they sold this month through yesterday after net purchases of $12 billion in the first four months of the year, according to Thai Bond Market Association data.

The yield on the 3.625 percent debt due June 2023 rose one basis point to 3.38 percent, data compiled by Bloomberg show.

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