Thailand’s baht fell the most in a week on concern overseas investors will keep pulling money from the nation’s assets as anti-government protests that began in late October last year show no sign of abating.
The Bank of Thailand on Wednesday cut this year’s growth forecast to about 3 percent from a prediction in November last year of 4 percent after unexpectedly holding its policy rate at 2.25 percent.
Thai Prime Minister Yingluck Shinawatra on Tuesday declared a 60-day state of emergency in Bangkok as she sought to combat violent attacks that threaten to derail elections scheduled for Feb. 2.
Global funds pulled a net US$195 million from local bonds and equities this month, official data show.
“We will most likely see continued fund outflows from Thailand and the baht is staying on a downward trend,” said Tsutomu Soma, manager of the fixed-income business unit at Rakuten Securities Inc in Tokyo. “There’s no clear picture of the protests ending or the situation improving, while we don’t even know if the elections can be held as scheduled.”
The baht dropped 0.2 percent, the most since Wednesday last week, to 32.931 per US dollar as of 3:54pm in Bangkok, according to data compiled by Bloomberg.
The currency has weakened 5.6 percent since the protests began on Oct. 31.
One-month implied volatility, a measure of expected moves in the exchange rate used to price options, fell 2 basis points, or 0.02 percentage point, to 7.2 percent.
Fourteen of 21 analysts surveyed by Bloomberg had expected the central bank to cut its policy rate by 25 basis points, while the rest forecast no change.
Bombings at anti-government rallies and shootings in the capital have killed one person and injured 70 since Friday last week.
Suthep Thaugsuban, a former opposition party lawmaker leading the protests, vowed to continue blockades of major intersections in Bangkok that began on Monday last week.
Thailand last saw a state of emergency to combat protests in 2010, when Suthep’s Democrat Party held power and oversaw a crackdown on protesters loyal to former Thai prime minister Thaksin Shinawatra, Yingluck’s brother, which killed more than 90 people.
The central bank expects some impact on the economy from the protests, spokeswoman Roong Mallikamas yesterday said in an interview with Bloomberg Television.
Tourist arrivals to Bangkok have fallen 20 percent since Monday last week, the first day of the blockades, from the same period a year earlier, and travel agencies will see more cancellations after a state of emergency was declared, Association of Thai Travel Agents president Sisdivachr Cheewarattanaporn said on Wednesday.
The yield on the 3.125 percent government bonds due December next year rose 1 basis point to 2.43 percent, according to data compiled by Bloomberg.