Bloomberg News

Baht Falls on Speculation Importers Buying Dollars; Bonds Drop

May 03, 2012

Thailand’s baht dropped for a second day on speculation importers are stepping up dollar buying to take advantage of a favorable exchange rate. Bonds declined.

The currency touched a five-week high yesterday as the Bank of Thailand said it will lift its 2012 economic growth forecast this month, after raising it to 5.7 percent from 4.9 percent in March. Imports gained 21.5 percent in March from a year earlier, the most since September, official data showed on April 30, as companies replaced machinery damaged in last year’s floods.

“We may see some importer demand for the dollar,” said Norawit Suparinayok, a foreign-exchange trader at Bangkok Bank Pcl. Still, he added, the baht was unlikely to weaken significantly because “Asia still has room to grow faster than other regions.”

The baht declined 0.1 percent to 30.92 per dollar as of 3:19 p.m. in Bangkok, according to data compiled by Bloomberg. It touched 30.68 yesterday, the strongest level since March 28. The currency may trade between 30.75 and 31 this week, Norawit forecast. One-month implied volatility, a measure of foreign- exchange swings used to price options, was little changed at 4.52 percent.

Consumer prices rose 2.47 percent in April from a year earlier, the least since 2009, official data show. The commerce ministry is forecasting inflation of between 3.3 percent and 3.8 percent this year.

The Bank of Thailand left its benchmark interest rate at 3 percent yesterday. The current level is “deemed to be appropriate in supporting a smooth recovery of economic activity to normal levels while keeping inflation within target,” Bank of Thailand Assistant Governor Paiboon Kittisrikangwan said in a statement.

The yield on the 3.25 percent notes due June 2017 rose two basis points, or 0.02 percentage point, to 3.60 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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