The Thai baht rose on Wednesday to return to levels unseen since before the 1997 Asian financial crisis, thanks to inflows and the absence of government moves to stem the appreciation, while some regional peers slid on worries about Cyprus. The baht rose as much as 0.7 percent to a 16-year high of 29.13 per dollar, according to Thomson Reuters data.
"We will not issue any special measure to deal with the strong baht," Finance Minister Kittirat Na Ranong told reporters in the morning, adding that such moves could cause panic in markets and undermine investor confidence. The Thai currency stood at 29.17 as some investors took profits after the central bank governor in the afternoon said the baht's recent appreciation has been a little too fast.
The baht has risen 4.9 percent this year, making it the best performing regional currency, Thomson Reuters data showed. "It's a bit too much and fast," Bank of Thailand Governor Prasarn Trairatvorakul said about the appreciation after meeting with economic ministers to discuss the baht. Prior to Wednesday, the governor had stated that the central bank was not concerned over the baht strength. Technically, the Thai currency has been seen as excessively bought with the dollar/baht's 14-day relative strength index at 16.6, far below the 30-threshold.
But some traders and analysts said Thai authorities may not intervene much yet to as inflows are too strong. "The BOT is stepping back to let the flow pass. 29.00 is a line in the sand that the BOT will watch," said BNP Paribas currency strategist Thio Chin Loo in Singapore. Thai bond markets already saw inflows of about $340 million on Monday and Tuesday, according to traders.
The baht also found support as Bangkok SkyTrain operator BTS Group Holdings Pcl is seeking to raise up to $2.1 billion by listing an infrastructure fund in what could be Thailand's biggest initial public offering, traders and analysts said. The won touched 1,120.0 per dollar, its weakest since September 26 on continuous foreign stock selling and expectations of dollar demand linked to a cancellation of an overseas ship order.
The South Korean unit also found a chart support around the session low with the 50.0 percent Fibonacci retracement at 1,120.1 of its appreciation between May and January. The rupiah touched 9,730 per dollar, its weakest since February 1, on stock outflows and dollar demand from local corporates, traders said. But the Indonesian currency did not slide further as the central bank was spotted buying it to stem weakness, traders said. Exporters also joined the bids.
The rupiah is likely to depreciate further, given worries about the Cyprus bailout plan, although the authority is expected to keep checking, traders said. The Philippine peso eased, tracking losses among emerging Asian currencies. The central bank governor said it will continue to assess the need for further reduction in the rate of its short-term special deposit account (SDA). The central bank has lowered the SDA rate by a total of more than 100 basis points since January, a bid to temper the peso's strength.