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Thai Baht Climbs to Three-Week High on U.S. Data; Bonds Decline

July 23 (Bloomberg) -- Thailand’s baht rose to a three-week high after a decline in U.S. home sales eased concern a reduction in the Federal Reserve’s monetary stimulus is imminent. Government bonds dropped for a fourth day.

Sales of previously owned homes in the world’s largest economy unexpectedly dropped 1.2 percent in June, according to data published yesterday. The Fed will start tapering its bond-buying program, which has spurred demand for emerging-market assets, in September, according to half of the 54 economists surveyed by Bloomberg News. A manufacturing report for China from HSBC Holdings Plc and Markit Economics is due tomorrow.

“The biggest factor moving the market is the U.S. economic data while some attention is being paid to this week’s China data,” said Disawat Tiaowvanich, a foreign-exchange trader at Bangkok Bank Pcl.

The baht climbed 0.3 percent from July 19 to 30.94 per dollar as of 3:12 p.m. in Bangkok and touched 30.89 earlier, the strongest level since July 2, according to data compiled by Bloomberg. Onshore financial markets were closed yesterday for a public holiday. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, fell 11 basis points, or 0.11 percentage point, to 6.53 percent.

Customs’ data July 26 may show exports climbed 1.5 percent in June after a 5.3 percent drop the previous month, according to the median estimate of economists in a Bloomberg survey.

Bank of Thailand Governor Prasarn Trairatvorakul told reporters today that the central bank isn’t concerned about capital movements or the strength of the baht, which has tracked regional peers. The central bank won’t “act against the market” on the baht, Prasarn said at the briefing in Bangkok.

The yield on the 3.625 percent bonds due June 2023 increased one basis point to 3.74 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: James Regan at jregan19@bloomberg.net

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