Thailand’s baht at 3-year low due to political unrest
Overseas funds have been net sellers of Thai stocks for 22 days, the longest stretch of net sales since August 2008
Jakarta: Thailand’s baht fell to a three-year low as global investors sold the nation’s stocks on concern political unrest will persist. Government bonds rose, pushing the 10-year yield to a six-week low.
Protesters swarmed two buildings in Bangkok on Tuesday in an attempt to block candidates from registering for the 2 February national vote, the latest in a series of demonstrations aimed at toppling Prime Minister Yingluck Shinawatra, who dissolved parliament on 9 December.
Overseas funds have been net sellers of Thai stocks for 22 days, the longest stretch of net sales since August 2008, according to data compiled by Bloomberg.
“Baht will be on a weakening trend, with politics as something to watch,” said Pareena Phuangsiri, an analyst at Kasikornbank Plc in Bangkok. “Investors were expecting tensions to reduce after the dissolution. But it doesn’t seem to be going toward that direction, so they remain cautious.”
The baht dropped 0.2% to 32.73 per dollar as of 3:38pm in Bangkok, and earlier reached 32.81, the lowest level since 7 June 2010, Bloomberg data show.
It lost 2.1% this month, the third-worst performer among Asia’s 11 most-traded currencies, after the Indonesian rupiah and Malaysian ringgit.
“The baht’s decline has been orderly, as the market adjusts to the US Federal Reserve’s stimulus reduction and the political unrest,” Bank of Thailand spokeswoman Roong Mallikamas said on Monday. The Fed said last week it will cut its monthly bond purchases to $75 billion in January from $85 billion.
One-month implied volatility, a measure of expected moves in the exchange rate used to price options, rose 20 basis points to 6.44%. The yield on the 3.625% bonds due June 2023 dropped one basis point, or 0.01 percentage point, to 3.97%, the lowest level since 5 November, data compiled by Bloomberg show.
Street Protests
Yingluck’s opponents began street demonstrations 31 October accusing her of economic mismanagement and seeking to introduce a law to exonerate her brother, Thaksin Shinawatra, who was ousted as the premier in a 2006 military coup and has lived overseas since fleeing a 2008 jail sentence for corruption.
Overseas funds sold $25.6 million more of Thai stocks than they bought on Monday as protesters blocked attempts by candidates to register for the 2 February election, taking this month’s outflows to $1.2 billion, official data show.
Foreign investors sold Thai shares for 26 straight days in June and August of 2008, when anti-government groups held similar protests calling for the resignation of then-premier Samak Sundaravej, who they also accused of being a proxy for Thaksin. The protests in 2008 had culminated in an eight-day shutdown of Bangkok’s main airports. Bloomberg
Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
MoreLess
First Published:24 Dec 2013, 07:26 PM IST
- Top Gainers
- Top Losers
- 52 Week High