SINGAPORE: The Thai baht rose on Friday to hover around a 28-month high on continued demand from offshore funds, but speculation of central bank intervention to curb its rise capped the upside, traders said.
The baht gained 0.3 percent to 29.55 per dollar as of 0513 GMT after hitting 29.54, according to Thomson Reuters data. The session high matched Tuesday's peak, the strongest mark since November 2010.
Traders said they have spotted central bank bids for the dollar around its lows while importers also bought the US currency. But some market players dismissed the suggestion that the Bank of Thailand had intervened on the day.
Investors were generally looking to buy the baht given the continued foreign-fund inflows, traders said.
"They are intervening to smooth the fall in dollar/baht. But the inflows are persistent and the baht is very strong. Nothing can shake it," said a foreign bank trader, expecting more offshore inflows linked to the country's infrastructure projects.
The central bank has been suspected of intervening recently when the baht has gone past 29.60 per dollar due to concerns the country's export competitiveness will be eroded, traders said.
The baht has been the best performing emerging Asian currency so far this year with a 3.6 percent appreciation against the dollar, Thomson Reuters data showed, helped by offshore fund inflows to the country's stocks and bonds.
Bullish positions in the Thai currency increased in the last two week, a Reuters poll showed on late Thursday.
Some investors locked in profits as the baht was considered to be in overbought territory. The dollar/baht's 14-day relative strength index stood at 29.8, lower than the 30-threshold, indicating the pair is near oversold territory.
Still, traders preferred to buy the local unit on dips.
A local trader said he doubted the central bank was intervening around the current levels, adding the authorities would probably step in when the baht strengthens further to 29.50.
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