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Baht Has Best Week Since September as Recovery Lures Inflows

Jan. 11 (Bloomberg) -- Thailand’s baht had its biggest weekly rally in four months as international investors increased holdings of the nation’s assets amid optimism the global recovery is gathering pace. Government bonds declined.

The currency reached a 10-month high today after funds bought $174 million more local shares than they sold this month through yesterday and pumped a net $1.4 billion into sovereign debt, data from the stock exchange and the Thai Bond Market Association showed. Export growth in China, Thailand’s largest overseas market, quickened to 14 percent in December from 2.9 percent the previous month, official data showed yesterday.

“Stocks have been rising and economic data are quite solid, and so funds are flowing to the riskier assets,” said Kozo Hasegawa, a foreign-exchange trader in Bangkok at Sumitomo Mitsui Banking Corp. “That supports Asian currencies and such a trend may remain for now.”

The baht climbed 0.8 percent from a week ago to 30.27 per dollar as of 3:28 a.m. in Bangkok, according to data compiled by Bloomberg. That was the biggest gain since the period ended Sept. 14. The currency advanced 0.1 percent today and touched 30.22, the strongest level since Feb. 29, 2011.

One-month implied volatility, a measure of expected moves in exchange rates used to price options, rose nine basis points to 4.2 percent this week. The rate increased 10 basis points, or 0.1 percentage point, today.

The yield on the 3.125 percent government bonds due December 2015 rose one basis point today and this week to 2.96 percent, data compiled by Bloomberg show.

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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