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Thai Stocks, Baht Rise After Court Clears Ruling Party of Fraud

Nov. 29 (Bloomberg) -- Thai stocks and the baht gained after Prime Minister Abhisit Vejjajiva’s ruling Democrat party was cleared of election fraud by the Constitutional Court.

The court ruled that an Election Commission petition to dissolve the party was unlawful, helping Abhisit avoid becoming the third leader forced from office since the 2007 election. The benchmark SET Index climbed 1.5 percent to 1,006.34 as of 3:11 p.m. in Bangkok and the baht gained 0.1 percent to 30.18 per dollar, according to data compiled by Bloomberg.

“It clears some political hurdles and it’s a relief rally for the baht,” said Kobsidthi Silpachai, head of capital markets research at Kasikornbank Pcl in Bangkok.

The baht earlier today touched 30.46, the lowest level since Sept. 30, and the key stock index fell 0.8 percent amid concern a guilty verdict could have led to the disbandment of the ruling party. Kasikornbank predicts the baht may advance to 29 by year-end, Kobsidthi said.

The Democrat party faced dissolution on charges that it misused a 29 million baht ($956,464) grant from the Election Commission for campaigning in a 2005 election. A guilty verdict would’ve disqualified Abhisit, who took power in 2008 after a court disbanded the ruling party linked to former Prime Minister Thaksin Shinawatra.

“It’s a big boost for Thai equities,” said Andy Pornprinya, senior vice president for regional institutional sales at UOB Kay Hian Securities (Thailand) Pcl in Bangkok. “This will further strengthen business and consumer sentiment.”

PTT Pcl, Thailand’s biggest company by market value, rose 3.3 percent to 313 baht. Siam Cement Pcl, the third biggest, gained 2.8 percent to 331 baht.

Government bonds fell for a fourth day. The yield on the 3.125 percent debt due December 2015 rose two basis points to 3.04 percent, the highest level since August, according to Bloomberg data. The one-year onshore interest-rate swap, the fixed cost needed to receive a floating payment, was unchanged from Nov. 26 at 1.395 percent. A basis point is 0.01 percentage point.

To contact the reporters on this story: Yumi Teso in Bangkok at yteso1@bloomberg.net; Anuchit Nguyen in Bangkok at anguyen@bloomberg.net.

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net

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