Baht gains on speculation as exporters converting earnings
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The Thai currency advanced to the strongest level in two weeks on speculation, as exporters converted their overseas income and as technical indicators
signalled that the US dollar might decline. Government bonds, meanwhile, remained steady.
The US currency’s 14-day relative strength index against the baht surged to 76 on Friday, above the 70 threshold that signalled the greenback had been overbought. The MSCI Asia-Pacific Index of shares snapped four days of losses after Canadian Finance Minister Jim Flaherty said his counterparts and central bank governors from the Group of Seven nations would hold a call yesterday to discuss Europe’s debt crisis.
The baht advanced 0.7 per cent from Friday to Bt31.68 per dollar as of 3.37pm in Bangkok and touched 31.43, the strongest level since May 23, according to data compiled by Bloomberg. Thai financial markets were closed on Monday.
“It’s natural to expect some exporter flows after a long weekend,” said Tohru Nishihama, an economist at Tokyo’s Dai-ichi Life Research Institute in Tokyo. “Amid no fresh bad news and a rebound in stocks, we are seeing a correction upwards in the regional currencies that have been weakening recently.”
The baht’s one-month implied volatility, a measure of exchange-rate swings used to price options, rose one basis point to 4.52 per cent. The yield on the government’s 3.25 per cent bonds due June 2017 was little changed at 3.46 per cent.
