Baht down on political violence

Baht down on political violence

Investor concerns as violence damages economic growth

Thailand’s baht fell the most in almost a week after explosions at anti-government protest sites killed four people over the weekend, adding to concern there is no end in sight for the unrest that is damaging growth.

Three people, two children and a woman, were killed when an explosion ripped through Bangkok’s main shopping district on Sunday and a five-year-old girl died in a separate blast in the eastern province of Trat on Saturday night, Feb 22.

The economy grew 2.9% last year, slowing from a revised 6.5% pace in 2012, and the National Economic and Social Development Board cut its 2014 expansion forecast this month to 3% to 4% from a previous range of 4% to 5%.

“The prolonged unrest will damage the economy and that’s also an underlying factor weighing on the local currency,” said Kozo Hasegawa, a currency trader at Sumitomo Mitsui Banking Corp. in Bangkok. “Losses in the baht may be limited by speculation of month-end demand from exporters.”

The baht fell 0.3% to 32.615 per US dollar as of 8.37 am in Bangkok, according to data compiled by Bloomberg. It has dropped 4.6% since the protests began on Oct 31, the most among the 11 most-traded regional currencies. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, declined three basis points, or 0.03 percentage point, to 6.59%.

Global funds sold $573 million more local equities than they bought this month through Feb 21 and offloaded a net $20 million of Thai bonds, official data show.

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