Thailand's baht touched a 16-year high after global funds boosted holdings of local bonds amid signs policy makers will refrain from curbing capital inflows that have fueled the regions best exchange-rate rally.
Central bank governor Prasarn Trairatvorakul, who on April 19 said the currency has started to move beyond fundamentals, and Finance Minister Kittiratt Na-Ranong have ruled out capital controls. The baht has advanced 7% this year, beating a 1.9% gain in India's rupee and 0.8% in China's yuan. Foreigners bought $2 billion more Thai sovereign debt than they sold this month through April 19, adding to net purchases of $9.8 billion in the first quarter, official figures show.
Inflows into bonds are continuing to put appreciation pressure on the baht, said Tohru Nishihama, an economist covering emerging markets at Dai-ichi Life Research Institute Inc. in Tokyo. They seem to be tolerant in general with the appreciation and are unlikely to introduce any tough measures.
The currency climbed 0.4% to 28.57 per dollar as of 8:48 a.m. in Bangkok, according to data compiled by Bloomberg. It touched 28.56 on April 22 and April 19, the strongest level since a devaluation in July 1997 that sparked the Asian financial crisis. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, increased nine basis points, or 0.09 percentage point, to 5.38%.
The yield on the 3.625% government bonds due June 2023 rose one basis point to 3.40%, data compiled by Bloomberg show.