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Thai Baht Gains Most in 5 Months as Bonds Rise on Easing Unrest

Feb. 17 (Bloomberg) -- Thailand’s baht strengthened the most in five months and bonds rose after police began dismantling anti-government demonstration sites in Bangkok and economic growth exceeded estimates.

Riot police removed barriers, sandbags and tents outside Government House on Feb. 14, when onshore financial markets were closed for a public holiday. Gross domestic product increased 0.6 percent in the fourth quarter from a year earlier, more than the median estimate in a Bloomberg survey for a 0.3 percent gain, official data showed today. Most Asian currencies rose today after China reported record new credit in January.

“Thai protests are still going on, but at least we don’t see a worsening of the situation,” said Koji Fukaya, chief executive officer and currency strategist at FPG Securities Co. in Tokyo. “That makes it easier for investors to buy back the baht while emerging markets are in a recovery mood.”

The baht climbed 1 percent from Feb. 13, the most since Sept. 19, to 32.285 per dollar as of 3:58 p.m. in Bangkok, according to data compiled by Bloomberg. It touched 32.215 earlier, the strongest level since Dec. 19. One-month implied volatility in the baht, a measure of expected moves in the exchange rate used to price options, dropped two basis points today, or 0.02 percentage point, to 6.38 percent.

Since the anti-government protests began on Oct. 31, demonstrators have occupied ministries, blockaded Bangkok intersections and disrupted polling during the Feb. 2 election to pressure Prime Minister Yingluck Shinawatra to step down. The movement has waned in recent weeks, with numbers dwindling to fewer than 100 at some demonstration sites.

Thailand’s GDP increased 2.9 percent in 2013, compared with a revised 6.5 percent in 2012, the data showed today.

The yield on the 3.125 percent government bonds due December 2015 fell two basis points to 2.34 percent, data compiled by Bloomberg show. That’s the lowest level since the current benchmark two-year notes were sold in 2010.

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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