Baht falls to lowest level since January

Baht falls to lowest level since January

The baht falls through the psychological support of 32 on Wednesday. (Photo by Apichit Jinakul)
The baht falls through the psychological support of 32 on Wednesday. (Photo by Apichit Jinakul)

Asia’s best-performing currency in the first quarter, the baht, is starting to lose its momentum amid political gridlock, a stronger US dollar and speculation of dividend-related fund outflows.

The Thai currency weakened to as low as 32.049 per dollar, the weakest level since Jan 9, and falling through the psychological support of 32. It was down 0.2% at 32 as of 12.22pm on Wednesday, after earlier this week falling through the 100-day moving average for the first time since mid-December.

Sentiment for the currency has deteriorated as concerns about political stability linger in the wake of the general election in March, first since the 2014 coup.

The Office of the Ombudsman said on Tuesday that it has accepted a petition seeking a review by a court of whether the election should be annulled.

Suraphol Kiatchaiyakorn, a Pheu Thai Party candidate who won a constituency seat in Chiang Mai in the election, will be banned from politics for at least one year for allegedly buying votes, according to the Election Commission.

“As for domestic factors, we have hiccups in the political landscape and also have some of the impact from the dividend season” that contributed to the weaker baht, said Roong Sanguanruang, a market analyst at Bank of Ayudhya Plc. The decline should be limited as “the fundamentals are still looking sound, if you look at the external position of Thailand”, she said. The bank expects a recovery of the baht to 31.75 by end-June.

The baht has weakened 0.9% against the dollar this quarter, following a 2.5% gain in the first three months of 2019. It has fallen seven of the past 10 years through 2018 in the second quarter partly due to foreign repatriation of dividend payments and a seasonal fall in tourist demand. The amount of dividends to be paid to foreigners in April and May is estimated at 87.6 billion baht, about the same as last year, according to estimates by Kasikornbank Plc.

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