Baht gains on hope of hike
The baht traded near a two-week high on speculation that the central bank will raise interest rates for the first time since June 2006 to quell inflation and boost the currency.
Government bonds declined. The baht is the biggest gainer over the past five days among the 10 most-active Asian currencies outside Japan. Central bank Deputy Governor Bandid Nijathaworn last month indicated borrowing costs can be raised to curb prices without slowing growth.
"Higher rates could support the baht," said Chutima Nuphan, a currency trader at TMB Bank in Bangkok. "Since yesterday, we have seen offshore investors selling
dollar-baht. The baht may pull back to the 33.25 level. The market thinks rates may go up 25 basis points."
The baht advanced 0.2 per cent to 33.34 per dollar yesterday.
The Bank of Thailand next meets on July 16, and policy-makers said on May 21 that they're ready to "adjust" monetary policy should inflation accelerate. Consumer prices gained 8.9 per cent in June from a year earlier, the most since July 1998.
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