Bloomberg News

Baht Gains After Bank of Thailand Says It Intervened; Bonds Rise

October 05, 2011

Oct. 5 (Bloomberg) -- Thailand’s baht gained for a second day after the central bank said yesterday it had intervened in the foreign-exchange market “recently” to curb volatility. Bonds rose for a fourth day.

The Bank of Thailand “sold the dollar, but not much,” Governor Prasarn Trairatvorakul said yesterday after the close of local trading. The baht slid 3.7 percent last month, the most in a decade, on concern a faltering global recovery will damp demand for the nation’s exports. Overseas shipments account for about two-thirds of Southeast Asia’s second-biggest economy.

“Intervention won’t be able to reverse the trend, but the baht’s decline may stall just for now,” said Minori Uchida, senior analyst in Tokyo at Bank of Tokyo-Mitsubishi UFJ Ltd.

The baht advanced 0.1 percent to 31.13 per dollar as of 3:00 p.m. in Bangkok, according to data compiled by Bloomberg. The currency may fluctuate between 30.80 and 31.30 this month, Uchida said.

Government bonds rose after a government report showed this week inflation eased last month. The yield on the 5.4 percent notes due July 2016 dropped five basis points, or 0.05 percentage point, to 3.52 percent, according to data compiled by Bloomberg.

Thailand’s consumer price index rose 4.03 percent in September from a year earlier, the least since March, official data show. Inflation expectations aren’t likely to increase and policy makers have “closed the gap somewhat” on normalizing interest rates, Prasarn said on Sept. 24. The central bank, which has raised its benchmark interest rate six times this year, meets next on Oct. 19.

“The Bank of Thailand may have to pause at least this month in raising rates as external conditions have been deteriorating,” Uchida said.

--With assistance from Suttinee Yuvejwattana in Bangkok. Editors: Ven Ram, Simon Harvey

To contact the reporter on this story: Yumi Teso in Bangkok at yteso1@bloomberg.net

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net


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