Baht headed for quarterly advance

The baht headed for its first quarterly gain in a year amid easing political unrest and optimism the current-account surplus is widening.

Thai voters went to the senate polls on Sunday, without facing opposition from protesters who derailed a general election on Feb 2 and have vowed to disrupt any future vote.

The baht rose on Monday before central bank data that's forecast to show the excess in the broadest measure of trade climbed to a five-year high of US$2.68 billion in February, according to a Bloomberg survey.

''We have seen an upward adjustment for the baht amid a stabilising 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 currency climbed 1.1% this quarter and 0.4% in March to 32.430 per dollar as of 9.24am, according to data compiled by Bloomberg. It rose 0.2% on Monday 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 58 basis points from the end of 2013 and 15 basis points this month to 6.27%. It declined two basis points, or 0.02 percentage point, on Monday.

Government bonds advanced this quarter. The yield on the 3.625% sovereign notes due June 2023 dropped 21 basis points from the end of last year to 3.72%t, data compiled by Bloomberg show. The rate rose four basis points in March and two basis points on Monday.

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