Baht has best week for five months
- Published: 13/09/2013 at 11:04 AM
- Online news:
The baht was poised for its best week in five months as foreign investors increased their holdings of the nation’s assets amid optimism that a global economy recovery is brightening the outlook for Asian exports.
The currency touched its strongest level in more than three weeks as exchange data show global funds bought US$310 million more Thai equities than they sold in the first four days of this week, set for their biggest weekly net purchase since November.
US retail sales rose 0.5% in August after a 0.2% gain in July, according to a Bloomberg survey of economists before data due today. The Federal Reserve may cut its monthly bond purchases by $10 billion at its Sept 17-18 policy meeting, a separate survey showed.
“We saw quite a sharp appreciation in the baht because of the inflows,” said Pareena Phuangsiri, a Bangkok-based analyst at Kasikornbank. “But gains will probably be short-lived and we have been recommending exporters wait” to buy the baht, she added.
The baht jumped 1.3% this week, the most since the five-day period ended April 19, to 31.83 per dollar as of 8:50 am in Bangkok, according to data compiled by Bloomberg. The currency fell 0.1% today and earlier reached 31.58, the strongest level since Aug 20.
One-month implied volatility, a measure of expected moves in the exchange rate used to price options, climbed 18 basis points, or 0.18 percentage points, to 7.88% this week. The gauge fell 11 basis points on Friday.
Overseas investors poured a net $381 million into Thai debt this week through Thursday, according to the Thai Bond Market Association.
Downward pressure on the baht will persist over the next few months given the prospect of the Fed’s tapering, and until confirmation of an improvement in Thailand’s balance of payments in the third quarter, Goldman Sachs Group Inc. said in a research note yesterday. The bank sees the currency at 33 per dollar in three months, weaker than its previous forecast of 31.3.
The yield on Thailand’s 3.625% sovereign bonds due June 2023 declined three basis points from a week ago to 4.37%, data compiled by Bloomberg show. The rate rose one basis point on Friday.
About the author
Writer: Bloomberg News