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Thai Baht Touches Two-Week Low as U.S. Budget Deadline Looms

Dec. 25 (Bloomberg) -- Thailand’s baht touched a two-week low as the year-end deadline approached in a budget-deficit showdown in the U.S., raising concern a recession in the world’s biggest economy may reduce demand for riskier assets.

The currency is set to rise this quarter, after a 3 percent gain in the previous three months. President Barack Obama and Republicans try to reach an agreement to avert more than $600 billion in automatic tax increases and spending cuts set to begin in January. House Speaker John Boehner scrapped a plan last week to allow higher tax rates on incomes above $1 million, and lawmakers left Washington for the Christmas holiday.

“Fiscal cliff has been the market’s main concern, and Asian currencies will continue to react on this development,” said Samson Tu, a Taipei-based fund manager at Uni-President Assets Management Corp., which oversees $700 million. “It’s Christmas and volumes are exceptionally low in the market.”

The baht was little changed at 30.63 against the greenback as of 3:02 p.m. in Bangkok, according to data compiled by Bloomberg. It touched 30.69 earlier, the weakest level since Dec. 12. One-month implied volatility, a measure of expected moves in exchange rates used to price options, was steady at 3.92 percent.

The yield on the 3.125 percent government bonds due June 2023 fell one basis point to 3.54 percent, data compiled by Bloomberg show.

To contact the reporter on this story: Andrea Wong in Taipei at awong268@bloomberg.net

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

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