Bloomberg News

Baht Retreats From 16-Month High Amid Intervention Concern

January 13, 2013

Thailand’s baht retreated from a 16- month high amid concern the central bank will intervene to slow gains that hurt exports. Government bonds advanced.

The currency touched its strongest level since September 2011 as global investors bought $1.6 billion more of sovereign notes than they sold this month through Jan. 11, and poured a net $172 million into local equities, stock exchange and Thai Bond Market Association data show. There is a broad-based recovery in Thai exports even as weakness in Europe and Japan persists, the Bank of Thailand said Jan. 9 after keeping its policy rate unchanged at 2.75 percent.

“Funds are coming in and the baht has been strengthening,” said Disawat Tiaowvanich, a foreign-exchange trader at Bangkok Bank Pcl. (BBL) “The baht may move on the stronger side as inflows will probably continue, but there is concern about central bank action in the market, capping the baht’s upside.”

The baht traded at 30.28 per dollar as of 8:20 a.m. in Bangkok from 30.27 on Jan. 11 after reaching 30.14 earlier, the strongest level since Sept. 14, 2011, according to data compiled by Bloomberg. One-month implied volatility, a measure of expected moves in exchange rates used to price options, declined two basis points, or 0.02 percentage point, to 4.08 percent.

Exports, which account for about two-thirds of Southeast Asia’s second-largest economy, climbed 27 percent in November after a 14 percent increase the previous month, a central bank report showed on Dec. 28.

The yield on the 3.125 percent government bonds due December 2015 fell one basis point to 2.96 percent, data compiled by Bloomberg show.

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

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net


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