Baht takes a dip on dollar buying

The baht retreated yesterday on impulse buying of US dollars, while concern over speculation in the stock market lingered despite days of profit taking.

Despite yesterday's step back, the baht has advanced the most among its regional peers, gaining 5.04 per cent this year to date.

The baht weakened to 29.22-29.24 per US dollar in morning trade from 29.08-29.11, the highest level since the 2007 Asian financial crisis, at the prior day's closing.

A currency trader sees the resistance level for the baht at 29.10 and the support level at 29.25.

Bank of Thailand Governor Prasarn Trairatvorakul remained silent on any additional measures for the baht. He acknowledged that the unit had appreciated rapidly in the past one to two days but said more foreign capital flowed into the bond market than the equity market.

Charamporn Jotikasthira, president of the Stock Exchange of Thailand (SET), said the stock market still showed signs of speculation despite the index dropping for several days.

"The market was volatile for the past two days with high turnover. That means high speculation. High turnover means making too-short investment," he said.

Besides raising the guarantee for cash balance accounts from 15 per cent to 20 per cent, the SET has not initiated any steps to curb stock speculation. The Association of Securities Companies will ask for comments from its members next week.

The SET Index receded against other regional markets in the morning, giving foreign investors pause to see the interest rate direction and measures for money markets, said Padon Vannarat, vice president of Maybank Kim Eng Securities (Thailand).

After rising in the morning session, the SET Index closed at down 14.15 points to 1529.52 points on trade worth Bt61.85 billion.

Full margin loans for securities, which partly prompted lack of buying support, were also cited for the market drops.

In the past two months, margin loans have reached Bt50 billion.

The SET plans to provide sufficient knowledge to investors, particularly newcomers, on investing.

In the first two months of this year, about 40,000 accounts were opened for stock trading. This year's target for new accounts is 100,000, according to the SET.

"It's good to have new investors if they understand stocks and the overall investment," he said.

Deputy Democrat Party leader Korn Chatikavanij said the baht was on an uptrend due to external factors. The US and Japan have a policy to print their own money, which are the currencies used by many countries around the world as their international reserves.

Those powerful economies were serious about reducing the value of their currencies so that they could export more products to the world’s market.

Korn, who was once a finance minister, said the Yingluck government has no policy to curb the capital inflows, as they want to support investors and the surge of the stock market.