Baht heads down again

Baht heads down again

The baht fell beyond 33 to the US dollar to nearly a four-year low yesterday on mounting jitters over domestic political tensions and the dollar's strength after a set of positive US economic data raised expectations the US Federal Reserve will continue its stimulus cutback.

The currency hovered around 33.00/33.02 yesterday, down from 32.95/32.97 on Thursday.

India's rupee and the baht led declines in Asian currencies this week, Bloomberg data show.

The rupee weakened by 0.9% from Dec 27 to 62.395 to the dollar, the baht fell by 0.5% to 33, Malaysia's ringgit lost 0.2% to 3.2952 and the Philippine peso declined by 0.6% to 44.64.

Offshore players are ditching the baht for the dollar on concerns over a potential confrontation after the pro-government United Front for Democracy against Dictatorship said it will stage a rally in Bangkok to counter anti-government protesters' planned Bangkok shutdown on Jan 13, a dealer at a local bank said.

The dollar's appreciation against other major currencies on expectation that the world's largest economy is recovering also dents risk appetite, the dealer said.

The baht's downward bias is expected to continue in the weeks ahead, he added.

Kasikornbank recently estimated that the baht could hit 34 to the dollar in the first quarter, weighed down by uncertainties in local and international markets.

The SET index yesterday extended Thursday's 5.23% slide, falling by 0.5% to close at 1,224.62 points. The main gauge has fallen by 74 points or 5.7% during the first two trading days of 2014.

"Buying force emerged while the SET index was heading close to 1,200. However, the index remains at risk of falling below the 1,200-point level, given the risks from the Bangkok shutdown lying ahead," said Apichat Poobunjirdkul, a senior vice-president of Tisco Securities.

Rising odds that Thai economic growth will be no more than 4% this year also cloud the local bourse, he said.

"January is expected to be a turbulent period for Thai politics, so it is very difficult for the stock market to stage a sustainable rebound," said Asia Plus Securities analyst Prakit Siriwattanaket.

A selling spree by long-term equity fund unitholders who invest for five calendar years in line with the Revenue Department's requirement is expected to continue depressing the stock market, he said.

Caretaker Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong said it was abnormal to see a 5% fall in the Thai stock market and blamed the political situation.

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