Thailand’s baht fell from a five- week high on speculation importers increased dollar purchases to take advantage of a more favorable exchange rate. Government bonds declined.
The currency touched 29.68 per dollar yesterday, the strongest level since Jan. 31, after a rally in U.S. stocks helped improve demand for riskier assets. Shipments from abroad jumped 41 percent in January, while exports rose 16 percent, resulting in a trade deficit of $5.5 billion, according to the latest official figures.
The baht near its recent high is probably a “good level for importers to buy dollars,” said Kozo Hasegawa, a foreign- exchange trader in Bangkok at Sumitomo Mitsui Banking Corp. “From the trade balance-perspective, there’s room for two-way movements in the baht.”
The baht weakened 0.2 percent to 29.79 per dollar as of 8:33 a.m. in Bangkok, according to data compiled by Bloomberg. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, rose two basis points, or 0.02 percentage point, to 5.21 percent.
The yield on Thailand’s 3.625 percent government notes due June 2023 rose one basis point to 3.66 percent, the highest level since Feb. 4, data compiled by Bloomberg show. The one- year onshore interest-rate swap, the fixed cost needed to receive a floating payment, rose one basis point to 2.72 percent.
Thai fixed-income markets are too bearish after pricing in the most monetary tightening in Asia even as core inflation slowed, Arup Ghosh, a Singapore-based hedge fund strategist at Citicorp Investment Bank, wrote in a note.
Investors should receive fixed rates in five-year swaps, he recommended, entering into such trades at 3.4 percent and targeting 3.2 percent and 3 percent. The rate rose one basis point today to 3.35 percent.
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