Thailand’s baht gained the most in two weeks after the Bank of Japan announced unprecedented monetary easing, a move that will increase the amount of cash able to be invested in emerging markets. Bonds were steady.
Japan’s central bank said yesterday it will double the monetary base by the end of 2014 through buying government debt. The Bank of Thailand left its benchmark interest rate unchanged at 2.75 percent this week, keeping its yield advantage over developed nations. Japan’s target rate is 0.1 percent. Global investors pumped $9.6 billion into Thai sovereign debt in the first quarter, official data show, driving a 4.4 percent rally in the baht, which reached a 16-year high last month.
“With the BOJ’s announcement of further easing, speculation grew for further fund inflows, supporting the baht,” said Kozo Hasegawa, a foreign-exchange trader in Bangkok at Sumitomo Mitsui Banking Corp. “The Thai central bank kept the rate unchanged, helping the fund inflow theme,” he said, adding that concern was growing policy makers could intervene to limit gains in the baht if it strengthened further.
The baht appreciated 0.3 percent, the biggest advance since March 20, to 29.28 per dollar as of 9:04 a.m. in Bangkok, according to data compiled by Bloomberg. It was unchanged from a week ago. The currency touched 29.08 on March 20, the strongest level since a devaluation in 1997 that sparked the Asian financial crisis.
A 5.8 percent decline in exports in February from a year earlier was partly caused by exchange-rate strength, Finance Minister Kittiratt Na-Ranong said on April 3.
One-month implied volatility, a measure of expected moves in the exchange rate used to price options, climbed seven basis points today and four basis points this week to 5.26 percent.
International investors bought $290 million more sovereign debt than they sold this month through yesterday, adding to the first-quarter inflows, Thai Bond Market Association data show.
The yield on Thailand’s 3.625 percent notes due June 2023 fell three basis points, or 0.03 percentage point, from a week ago to 3.51 percent, according to data compiled by Bloomberg. The rate declined one basis point today to the lowest level since March 28.
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