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Baht Posts Biggest Two-Day Loss Since December After Fatal Clash

Feb. 19 (Bloomberg) -- Thailand’s baht completed its biggest two-day loss in almost two months after clashes between anti-government protesters and police in Bangkok killed four people and wounded at least 66.

Protesters fired guns and threw a grenade at police, injuring 33 officers seeking to clear demonstrators from an area in the historic district of the capital yesterday, said Songpol Watanachai, deputy chief of the Metropolitan Police. Thailand’s economy grew 0.6 percent last quarter from a year earlier, the slowest pace in almost two years, data showed Feb. 17.

The baht weakened 0.3 percent to 32.55 per dollar as of 3:33 p.m. local time, after touching 32.67 earlier, according to data compiled by Bloomberg. Its two-day loss to 0.9 percent was the most since Dec. 20. The currency has depreciated 4.4 percent since the end of October, when the protests began.

“The baht is looking increasingly vulnerable,” said Nicholas Spiro, London-based managing director at Spiro Sovereign Strategy. “It’s the bleak prospects for the already weak domestic economy, as the political standoff shows no signs whatsoever of being resolved in a peaceful manner.”

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, increased 13 basis points, or 0.13 percentage point, to 6.54 percent.

Rice Program

Yesterday’s clash was the deadliest since five people died in political violence on Nov. 30, according to the Bangkok Emergency Medical Center’s website. Other protest sites at key intersections in downtown Bangkok were unaffected. Tharit Pengdit, the director-general of the Department of Special Investigation, said 144 protesters were arrested.

The demonstrators led by former opposition party powerbroker Suthep Thaugsuban have refused to negotiate with the government, saying the protest won’t end until an unelected council is put in place to reform what they say is a corrupt political system. Thailand’s anti-corruption agency said yesterday it had enough evidence to charge Prime Minister Yingluck Shinawatra with negligence over a rice-buying program.

The yield on the 3.125 percent government bonds due December 2015 was little changed at 2.34 percent, data compiled by Bloomberg show. The yield has dropped 25 basis points this year.

To contact the reporters on this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net; 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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