Thai Baht Reverses Loss on Speculation Dollar Bets Being Unwound

Thailand’s baht rose, reversing an earlier decline, amid speculation investors are unwinding bets on dollar gains as they wait for a signal from the Federal Reserve on the future of its stimulus program.

Fed Chairman Ben S. Bernanke will speak to reporters at the end of the monetary authority’s two-day meeting today. Global investors have pulled $2.6 billion from Thai bonds and equities and the baht fell 3 percent since May 22, when Bernanke said $85 billion a month of debt purchases could be reduced if there is a sustained improvement in the U.S. jobs market. The Bank of Thailand has sold dollars to curb currency volatility, Governor Prasarn Trairatvorakul said June 13.

The baht advanced 0.5 percent to 30.72 per dollar as of 3:47 p.m. in Bangkok, after falling as much as 0.7 percent earlier, data compiled by Bloomberg show. It reached 31.19 on June 12, the weakest level since Sept. 7. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, rose 10 basis points, or 0.1 percentage point, to 7.94 percent.

“Investors are trying to reduce their positions before the FOMC ends,” said Tsutomu Soma, manager of Rakuten Securities Inc.’s fixed-income business unit in Tokyo. “In addition, concern is growing about intervention in Thailand especially when the baht is falling beyond 31.”

The yield on the 3.625 percent government bonds due June 2023 dropped three basis points to 3.77 percent, according to data compiled by Bloomberg.

The government sees no need to implement measures to stem outflows, Somchai Sujjapongse, director-general of the finance ministry’s fiscal policy office, said June 14, adding that money will eventually flow back.

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