At least three trading patterns show Thailand’s baht, this year’s best-performing Asian currency, is poised to fall as policy makers step up warnings that its rally to a 16-year high is stretched.

The baht’s 2 percent advance this month pushed the 14-day relative strength indicator to 28, data compiled by Bloomberg show. Iceland’s krona is the only one of 25 emerging-market currencies tracked by Bloomberg to have a lower reading and a level below 30 typically signals a reversal may occur. Trading envelope and stochastics oscillator indicators also suggest the baht’s rise has gone too far.

Central bank Governor Prasarn Trairatvorakul told reporters in Bangkok on April 19 that the baht’s advance has started to move beyond fundamentals, 10 days after he said the rally was “too fast.” Assistant Governor Paiboon Kittisrikangwan told reporters today it rose “too much and too quickly.” Finance Minister Kittiratt Na-Ranong reiterated his call last week for the central bank to cut interest rates to deter inflows to the country’s bond market.  “The baht has overshot my expectations,” Sacha Tihanyi, a Hong Kong-based senior foreign-exchange strategist at Bank of Nova Scotia, which was the second most-accurate forecaster for Asian currencies over the past year, said in an interview on April 19. “Should this trend continue unabated, Thai policy makers will eventually act to take some of the steam out.”

The currency strengthened 1.3 percent last week to 28.67 per dollar, the biggest gain in three months, on speculation the Bank of Japan (8301)’s bond purchases will prompt Japanese pension funds and insurance companies to turn to emerging markets for higher returns. It touched 28.56 today and on April 19, the strongest level since a devaluation during the Asian financial crisis in 1997, and dropped 0.1 percent to 28.71 as of 2:25 p.m. in Bangkok.

Tihanyi forecasts the baht will slip to 30.4 per dollar this quarter. The median forecast of 24 analysts surveyed by Bloomberg is for the baht to fall 1 percent to 29 by year-end. Westpac Banking Corp., the most-accurate forecaster for Asian currencies over the past four quarters based on Bloomberg data, predicts the baht will end 2013 at 28.9.

The baht’s 6.5 percent appreciation in 2013 may cause the government to miss its export growth target of 8 percent to 9 percent this year, Kittiratt said on April 18.

Overseas shipments fell 5.8 percent in February from a year earlier, the first decline since August, government data showed March 28, and the Bank of Thailand on April 12 lowered its 2013 export growth forecast to 7.5 percent from 9 percent.

While ruling out imposing capital restrictions, Prasarn told reporters on April 9 that the central bank stands ready to intervene should the currency move against fundamentals.

Prasarn’s comments may “signal policy actions on the way soon,” analysts at Credit Suisse AG led by Ray Farris wrote in a note on April 19. “FX intervention is probably most likely as Bank of Thailand has continued to rule out capital controls.”

The currency rally is creating a rift between policy makers as Kittiratt blamed the central bank for holding off on interest-rate cuts to attract foreign capital. Prasarn has kept the benchmark rate at 2.75 percent since October, the lowest since April 2011 and compared with a record low of 1.25 percent set in 2009. Japan’s key rate is at 0.1 percent.

Central bankers said in a statement on April 3 after keeping the rate unchanged for a fourth meeting that they are ready to adjust policy if needed and are still concerned about credit growth.

Global funds bought a net $2 billion of Thai government debt this month, taking this year’s purchases to $12 billion, compared with $31 billion for 2012 as a whole, Thai Bond Market Association data show. Japanese money managers boosted ownership of baht-denominated notes by 26 percent in the first quarter to 24.4 billion yen ($244 million), data from the Investment Trusts Association of Japan show.

If foreign capital “comes for investment in the real sector, that’s good,” Kittiratt told reporters in Bangkok on April 19. “But if it comes to seek short-term benefit in bonds, we have to be careful.”

Technical indicators watched by traders suggest the baht move is becoming too extreme.

Trading envelopes show the currency increase over the past 20 days has strayed from its average by more than two standard deviations, which typically occurs about 5 percent of the time. When such a pattern last happened for more than three days, in the period ended March 21, the baht lost 0.8 percent in eight days.

Stochastics, which measure the price of a security relative to its highs and lows during a particular period, has fallen below 30, a territory regarded as showing the baht is overbought. Stochastics is a technical analysis tool based on momentum measures often used to identify whether a security’s price is overbought or oversold. “We are starting to see momentum divergence coming to play here,” Niall O’Connor, a technical analyst at JPMorgan Chase & Co. in New York, said in a telephone interview on April 19. “A correction phase could develop.”

Technical analysis, popularized by Charles Dow, creator of the Dow Jones Industrial Average in 1896, is based on the theory that a chart of the price of financial assets contains clues about future movements as history tends to repeat itself.

The Bank of Thailand raised its 2013 economic growth forecast to 5.1 percent on April 12 from a January prediction of 4.9 percent. The outlook remains slower than last year’s 6.4 percent expansion.

 “At this moment, demand for the baht has been strong on the anticipated Japan-led growth and real money flows,” Wee- Khoon Chong, a strategist in Hong Kong at Societe Generale SA, said in an interview on April 19. “The baht appreciation will reverse at some point as it will hurt some part of the economy.”

Traders are expecting wider currency swings. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, climbed to 5.39 percent on April 9, the highest since August, according to data compiled by Bloomberg. The gauge rose six basis points, or 0.06 percentage point, today to 5.35 percent.

Thailand’s policy makers “will be concerned with the market being overly skewed in its thinking that the baht is a one-way bet,” said Scotia’s Tihanyi.