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Baht Gains as Greek Aid Optimism, China Easing Spur Risk-Taking

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Feb. 20 (Bloomberg) -- Thailand’s baht rose to a three-month high as optimism grew that European finance ministers will approve a second bailout for Greece when they meet today and China relaxed lenders’ reserve requirements.

Emerging-market currencies and shares advanced across Asia as investors favored higher-yielding assets. Global funds purchased $347 million more Thai equities than they sold last week and bought a net $1.3 billion of government debt, data from the stock exchange and the Thai Bond Market Association show.

“Risk sentiment has been improving due to some optimism about Greece, supporting the appreciation in the regional currencies,” said Minori Uchida, senior analyst in Tokyo at Bank of Tokyo-Mitsubishi UFJ Ltd. “China’s easing is a positive factor for the global economy. Developments in Europe remain key for the market’s direction.”

The baht added 0.1 percent to 30.75 per dollar as of 3:15 p.m. in Bangkok and touched 30.64 earlier, the strongest level since Nov. 9, according to data compiled by Bloomberg. The currency may trade between 30.50 and 32 before the end of March, Uchida said.

A report today showed Thailand’s economy contracted 9 percent in the last quarter of 2011 when the nation’s worst floods in almost 70 years disrupted production. That compares with the median estimate in a Bloomberg survey of a decline of 5 percent and a revised 3.7 percent expansion in the previous three months.

The yield on the government’s 3.25 percent bonds due June 2017 added three basis points, or 0.03 percentage point, to 3.24 percent, according to data compiled by Bloomberg.

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

To contact the editor responsible for this story: Simon Harvey at sharvey6@bloomberg.net.

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