Baht Climbs to Three-Month High as Emergency Decree to Be Lifted

Thailand’s baht climbed to a three-month high after the Cabinet approved lifting the state of emergency tomorrow.

The currency rose for a fourth day as Deputy Prime Minister Yukol Limlamthong said the emergency decree, which was imposed on Jan. 22, would be ended before it was scheduled to expire on March 23. Authorities will continue to use the Internal Security Act to control anti-government protests, he said. The MSCI AC Asia Pacific Index of shares rallied the most in almost two weeks after the Standard & Poor’s Index of U.S. stocks rose 1 percent yesterday.

“Easing political concern in Thailand is providing support for the baht,” said Tsutomu Soma, manager of the fixed-income business unit at Rakuten Securities Inc. in Tokyo. “The baht also benefited from improving global risk sentiment as the fading threat of conflict in Ukraine helped boost stocks.”

The Thai currency gained 0.3 percent to 32.155 per dollar as of 3:31 p.m. in Bangkok and touched 32.104 earlier, the strongest level since Dec. 18, according to data compiled by Bloomberg. The baht has advanced 1 percent in four days, paring its loss since the anti-government protests began on Oct. 31 to 3.2 percent.

Thailand’s economy may record zero growth or contract this year should the political unrest continue, Thai Chamber of Commerce Chairman Isara Vongkusolkit said at a news conference today in Bangkok. Expansion is forecast at 2 percent to 3 percent in 2014 if a new government can be formed in the third quarter, he said.

One-month implied volatility in the baht, a measure of expected moves in the exchange rate used to price options, increased three basis points, or 0.03 percentage point, to 6.54 percent.

The yield on the 3.625 percent sovereign bonds due June 2023 rose three basis points to 3.69 percent, data compiled by Bloomberg show. The yield reached 3.65 percent yesterday, the lowest level since June 2013.

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