The baht weakened by the most in more than three months on Friday, paring a last week's gain, after minutes of a Federal Reserve meeting indicated the monetary authority will probably end its bond-buying programme this year.
Fed members were divided between a mid- or end-of-year finish to the debt purchases that have helped boost demand for riskier assets, according to the minutes of last month's meeting released on Thursday in Washington. The baht touched a 10-month high on Friday as foreign funds bought $36 million more local stocks than they sold last week, exchange data show.
''Funds will continue to pour into Thailand and I don't think this trend will reverse too soon,'' said Kozo Hasegawa, a foreign-exchange trader in Bangkok at Sumitomo Mitsui Banking Corp.
The baht dropped 0.4% to 30.48 per dollar in Bangkok in the biggest decline since Sept 24, according to data compiled by Bloomberg. Friday's loss cut last week's gain to 0.4%. It rose as high as 30.29 on Thursday.
Government bonds completed a weekly loss as official data released Jan 2 showed inflation accelerated to a 13-month high of 3.6% in December. The Bank of Thailand will keep its benchmark interest rate at 2.75% at its Jan 9 meeting, says a Bloomberg survey.
The yield on the 3.875% notes due June 2019 rose 11 basis points to 3.34% from a week ago. The yield added three basis points on Friday.