Baht set for best week in 4 months

Thailand's baht was poised for its biggest weekly rally in four months as international investors increased holdings of the country's assets amid optimism the global recovery is gathering pace. Government bonds were steady.

The currency reached a 10-month high on Friday after funds bought US$174 million more local shares than they sold this month through yesterday and pumped a net $1.4 billion into sovereign debt, data from the stock exchange and the Thai Bond Market Association showed. Export growth in China, Thailand’s largest overseas market, quickened to 14% in December from 2.9% the previous month, official data showed on Thursday.

"Stocks have been rising and economic data are quite solid, and so funds are flowing to the riskier assets," said Kozo Hasegawa, a foreign-exchange trader in Bangkok at Sumitomo Mitsui Banking Corp. "That supports Asian currencies and such a trend may remain for now."

The baht climbed 0.9% from a week ago to 30.24 per dollar as of 8.36am in Bangkok, according to data compiled by Bloomberg. That was the biggest gain since the period ended Sept. 14. The currency advanced 0.2% on Friday and touched 30.22, the strongest level since Feb 29, 2011.

One-month implied volatility, a measure of expected moves in exchange rates used to price options, rose four basis points to 4.15% this week. The rate increased five basis points, or 0.05 percentage point, on Friday.

The yield on the 3.125% government bonds due December 2015 was 2.95%, little changed from Thursday and the end of last week, data compiled by Bloomberg show.

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Writer: Bloomberg News
Position: News agency