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Thai Baht Rises This Week, Bonds Fall as Growth Beats Estimates

Aug. 24 (Bloomberg) -- Thailand’s baht completed its biggest weekly advance since February and government bonds fell after a report showed the economy expanded more than economists estimated in the second quarter.

Gross domestic product increased 4.2 percent from a year earlier, more than the 3.1 percent gain in a Bloomberg survey, an Aug. 20 report showed. Global funds bought $86 million more government debt than they sold this week through yesterday, according to data from the Thai Bond Market Association. Chinese central bank Governor Zhou Xiaochuan said this week adjustments to interest rates and banks’ reserve requirements “can’t be ruled out,” while minutes from the Federal Reserve’s last meeting showed support for further monetary easing.

“The stronger GDP data was additional support for the baht this week amid not-so-bad risk sentiment due to some monetary stimulus speculation,” said Tohru Nishihama, an economist at Dai-ichi Life Research Institute Inc. in Tokyo. “Some funds are flowing into the bond market, which is supportive for the baht.”

The baht climbed 0.9 percent this week to 31.23 per dollar as of 3:11 p.m. in Bangkok, according to data compiled by Bloomberg. It declined 0.1 percent today. The currency touched 31.15 earlier, the strongest level since May 11. One-month implied volatility, a measure of exchange-rate swings used to price options, held steady today and this week at 4.51 percent.

The yield on the government’s 3.25 percent bonds due June 2017 rose three basis points, or 0.03 percentage point, to 3.21 percent this week, according to data compiled by Bloomberg. The rate was little changed today.

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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