The baht rose by the most in two weeks on speculation policy makers will tolerate currency gains to counter inflation. Government bonds were steady.
Deputy Prime Minister Finance Minister Kittiratt Na-Ranong said last week the central bank should avoid fighting market forces to stem baht appreciation. International investors bought US$3.7 billion more local sovereign debt than they sold this month through yesterday and poured a net $487 million into equities, official data show. Inflation accelerated to 3.63% in December, the fastest in 13 months, government figures showed Jan 2.
"The baht has received support from the perception that Thai authorities are more amenable to currency appreciation," said Sacha Tihanyi, senior foreign-exchange strategist at Scotiabank in Hong Kong. "This has helped encourage portfolio flows. Domestic economic conditions may cause price pressures, while baht gains can help contain imported inflation."
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