Baht Rises Most in Three Weeks on Relatively Peaceful Election

Thailand’s baht strengthened by the most in three weeks after national elections passed without major violence after months of political protests.

The currency advanced to the highest level in more than two weeks after voters cast ballots across almost 90 percent of the country on Feb. 2. The Democrat Party, which boycotted the poll, may file cases to the Constitutional Court, the Supreme Court, the National Anti-Corruption Commission and the Ombudsman seeking an annulment, party leader Abhisit Vejjajiva said in an interview with Blue Sky television network.

“The fact that the election day ended more peacefully than expected led to some buyback of the baht this week,” said Tsutomu Soma, manager of the fixed-income business unit at Rakuten Securities Inc. in Tokyo. “Still, the basic trend of a weaker baht will remain intact as the situation won’t be solved anytime soon and the unrest is likely to continue.”

The baht climbed 0.4 percent, the biggest gain since Jan. 14, to 32.797 per dollar as of 3:55 p.m. in Bangkok, according to data compiled by Bloomberg. The currency reached 32.77 earlier, the strongest level since Jan. 17.

Protests calling for the ouster of Prime Minister Yingluck Shinawatra helped contribute to a 4.6 percent loss in the baht over the past three months, while the Federal Reserve’s stimulus tapering is also cutting demand for emerging-market assets. The nation’s SET Index of shares dropped 1.2 percent today amid a selloff in regional equities.

Bond Market

The Election Commission said voting results can’t be certified until by-elections are held in affected areas. The delay means parliament can’t be convened for several months and Yingluck’s administration will remain in caretaker mode, restricting its ability to raise funds.

One-month implied volatility in the baht, a measure of expected moves in the exchange rate used to price options, dropped 10 basis points, or 0.10 percentage point, to 7.35 percent.

The yield on the 3.125 percent government bonds due December 2015 was steady at 2.44 percent, data compiled by Bloomberg show. The rate on 10-year notes climbed one basis point to 4 percent.

Before it's here, it's on the Bloomberg Terminal.