Bloomberg News

Baht Drops as Importers May Boost Dollar Buying; Bonds Decline

May 02, 2012

Thailand’s baht fell, retreating from a one-month high, on speculation importers will boost dollar purchases to take advantage of a favorable exchange rate. Bonds declined as the central bank kept borrowing costs unchanged.

Companies probably bought dollars to meet overseas payments after the baht rallied through the five days ended April 30, making foreign exchange cheaper. The Bank of Thailand left its one-day bond repurchase rate at 3 percent as predicted by all 18 economists in a Bloomberg News survey. The baht rose earlier after separate reports showed manufacturing picked up in China and the U.S.

“Importers still play a major role here and some investors may have taken profit from the baht’s appreciation earlier,” said Amonthep Chawla, a Bangkok-based analyst at Kasikornbank Pcl. (KBANK) “The BOT decision was in line with expectations and it doesn’t seem to have an impact on markets.”

The baht dropped 0.4 percent from April 30 to 30.84 per dollar as of 3:15 p.m. in Bangkok, according to data compiled by Bloomberg. It touched 30.68 earlier, the strongest level since March 28. Local financial markets were closed yesterday for a public holiday. One-month implied volatility, a measure of foreign-exchange swings used to price options, was little changed at 4.52 percent.

A central bank report showed on April 30 that imports rose 21.5 percent in March from a year earlier, the biggest increase since September, as companies replaced machinery damaged in last year’s floods, which were the worst in almost 70 years and affected two-thirds of the country. Exports fell 6.8 percent.

The yield on Thailand’s 3.25 percent bonds due June 2017 rose one basis point, or 0.01 percentage point, to 3.63 percent, according to data compiled by Bloomberg.

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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