Thai Baht Advances on Intervention Speculation; Bonds Rise

Thailand’s baht gained the most in more than a week amid concern the central bank will step in to halt declines that sent it to a nine-month low. Government bonds climbed.

The Bank of Thailand will intervene to curb excessive volatility if needed, Deputy Governor Pongpen Ruengvirayudh said on June 20. The central bank bought bonds in the secondary market for operational reasons, she told reporters in Bangkok today. The baht reached 31.25 per dollar on June 21, the weakest since Sept. 7. Official data showed global funds pulled a net $2 billion from Thai bonds and equities this month through yesterday on concern the Federal Reserve may trim the stimulus that has fueled demand for emerging-market assets.

“Concern about intervention is leading to some rebound in the baht,” said Tohru Nishihama, an economist covering emerging markets at Dai-ichi Life Research Institute Inc. in Tokyo. “But downward pressure on the baht and other assets as well as fund outflow pressure continue as the situation surrounding emerging markets hasn’t changed.”

The baht advanced 0.6 percent to 30.93 per dollar as of 3:33 p.m. in Bangkok, the most since June 14, data compiled by Bloomberg show. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, fell 13 basis point, or 0.13 percentage point, to 7.66 percent.

The baht weakened 1.8 percent last week, the biggest five-day drop since April, after Fed Chairman Ben S. Bernanke said June 19 that $85 billion a month of debt purchases may be trimmed this year and ended in 2014 if the U.S. economy performs in line with the monetary authority’s projections.

The yield on the 3.625 percent government notes due June 2023 fell six basis points to 3.95 percent, according to data compiled by Bloomberg. It touched 4.01 percent yesterday, the highest since September 2011.

Thailand will report export data tomorrow. The Customs Department may say shipments contracted 4.2 percent last month, after growing 2.9 percent in April, according to the median estimate of economists surveyed by Bloomberg. Central bank figures are due June 28.

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