Thai baht has quarterly gain on easing political unrest, surplus

Thai voters went to the polls yesterday to select half of the nation’s Senate, without facing opposition from protesters who derailed a general election on Feb. 2 and have vowed to disrupt any future vote. The baht strengthened today as central bank figures showed the excess in the broadest measure of trade climbed to $5.1 billion in February, the most since Bloomberg started compiling the data in 1991.

“We have seen an upward adjustment for the baht amid a stabilizing political situation,” said Tsutomu Soma, manager of the fixed-income business unit at Rakuten Securities Inc. in Tokyo. “Slumping imports contributed to the current-account surplus and that means less demand for the dollar. The baht may revert to a weaker bias as we don’t see how the political deadlock will end and the prolonged unrest is hurting growth.”

The Thai currency climbed 1.1 percent this quarter and 0.4 percent in March to 32.428 per dollar as of 3:49 p.m. in Bangkok, according to data compiled by Bloomberg. It rose 0.2 percent today and reached a one-week high of 32.408 earlier.

One-month implied volatility, a measure of expected moves in the baht used to price options, dropped 41 basis points from the end of 2013 to 6.45 percent. It increased 15 basis points, or 0.15 percentage point, today.

Vote Undisrupted

All 93,231 polling stations in 77 provinces opened without disruption, the Election Commission said yesterday. The election will select 77 members of Thailand’s half-appointed upper house. The remainder are chosen by a committee that includes the heads of the Constitutional Court, Election Commission, National Anti- Corruption Commission, State Audit Commission and a representative of the Supreme Court.

Thailand’s finance ministry cut its 2014 economic-growth prediction on March 27 to 2.6 percent from an earlier target of 3.1 percent and said the failure to form a new government may delay approval of the budget until the second quarter of 2015. A prolonged political deadlock lasting into the second half of the year may prompt a reassessment of Thailand’s rating outlook, Fitch Ratings said March 20.

Thailand’s exports increased 2.2 percent in February from a year earlier, after a decline of 1.5 percent the previous month, while imports dropped 19 percent following a 12.4 percent slide, central bank data showed today.

“Domestic demand has been under pressure as the political situation has delayed investment decisions and suppressed imports,” said Sacha Tihanyi, a Hong Kong-based currency strategist at Scotiabank. The “massive contraction in imports” helped offset weakness in the capital account and support the baht, he said.