The Thai baht pulled back from a 16-year high as a technical indicator signaled a possible rebound in the dollar and amid concern the central bank will intervene to slow the currency's gains. Government bonds rose.
The baht climbed to the strongest level since 1997 on Wednesday as official data showed global funds poured a net US$1.6 billion into sovereign debt this month through on Wednesday. The dollar's 14-day relative strength index was 26 against the baht, below the 30 threshold that suggests to some traders that the greenback's recent decline was excessive. Bank of Thailand Assistant Governor Paiboon Kittisrikangwan said on April 12 that the monetary authority will monitor capital inflows and the baht, which has risen "faster than expected."
"Today's move is probably just a correction after reaching a high, and due to some concern about intervention,” said Tsutomu Soma, manager of Rakuten Securities Inc's fixed-income business unit in Tokyo. "Clearly, the trend remains for the baht to strengthen on fund inflows."
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