Speculators push up baht again

Speculators push up baht again

The value of the baht advanced Friday, halting a two-week loss, on speculation that the country's accelerating economic growth will attract investment.

Gross domestic product (GDP) rose a record 18.9 per cent year on year during the last quarter, taking 2012's rate to 6.4 per cent. That was more than the 6.1 percent in Indonesia, the only economy in the region that is larger than Thailand's.

Overseas funds bought $1.9 billion more sovereign notes than they sold in February, according to the Thai Bond Market Association, while 10-year debt yields fell three basis points this week to 3.62 per cent.

"The economy is very strong and it's natural to see appreciation pressure on the baht," said Koji Fukaya, president of Office Fukaya, a currency research and consulting company in Tokyo. "From time to time, authorities may have to step in to the market just to slow the pace of appreciation."

The baht strengthened 0.1 per cent Friday morning and this week to 29.84 per US dollar as of 8:37 a.m. in Bangkok, according to data compiled by Bloomberg. The currency has climbed 2.5 per cent in 2013, the best performance in Asia.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, dropped eight basis points to 5.25 per cent, the lowest level in a month. The measure fell 18 basis points, or 0.18 percentage point, this week.

The Bank of Thailand said it will closely monitor capital inflows and take action if needed after keeping its policy rate unchanged at 2.75 per cent on Wednesday.

Government data next week may show exports, which account for about two-thirds of the nation's economy, increased 13 per cent in January and imports jumped 19 per cent, according to the median estimate of economists in a Bloomberg survey.

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