Baht Posts Biggest 3-Day Loss in Six Weeks on Violent Protests

Thailand’s baht dropped, posting its biggest three-day loss in more than six weeks, on concern escalating political tensions will hurt growth at a time when investors are trimming holdings of emerging-market assets.

The Civil Court ordered the government yesterday not to use force to contain the protests after a violent clash between police and demonstrators on Feb. 18 left five people dead and injured at least 69. Overseas investors have sold $948 million more Thai stocks than they bought this year and $124 million in bonds, exchange data show, as the Federal Reserve started paring stimulus that had driven capital into developing markets.

“The deteriorating political situation in Thailand is hurting the baht at a time when general sentiment for emerging-market currencies is weak,” said Tsutomu Soma, manager of the fixed-income business unit at Rakuten Securities Inc. in Tokyo. “Technically, it was time for the baht to see a downward correction from a rally earlier this month.”

The baht fell 0.2 percent to 32.59 per dollar as of 3:25 p.m. in Bangkok, taking the three-day decline to 1 percent, the biggest since Jan. 6, according to data compiled by Bloomberg. The currency strengthened 1.3 percent this month and reached 32.207 on Feb. 18, the highest since Dec. 19.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, rose six basis points, or 0.06 percentage point, to 6.59 percent.

Police say they were attacked with grenades and guns on Feb. 18 while attempting to clear a protest zone in central Bangkok. The demonstrations are aimed at ousting Prime Minister Yingluck Shinawatra amid claims her government is corrupt.

The cost of insuring Thai bonds for five years using credit default swaps climbed eight basis points yesterday to 146, the highest level in almost a week and above the 2013 average of 109, CMA prices show.

Thailand’s 10-year sovereign bonds gained, with the yield on the 3.625 percent notes due in June 2023 falling three basis points to 3.81 percent, the lowest level since Oct. 18, data compiled by Bloomberg show. The rate on two-year securities declined one basis point to 2.33 percent.

To contact the reporter on this story: Yumi Teso in Bangkok at yteso1@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net

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