The Thai central bank governor yesterday said there had been no abnormal speculation in the foreign-exchange market a day after the death of Thai King Bhumibol Adulyadej and the bank would support liquidity of the baht in the event of any tightening.
Bank of Thailand (BOT) Governor Veerathai Santiprabhob said financial markets were “relatively stable” yesterday.
“We have yet to find abnormal speculative financial market movements,” Veerathai told reporters.
“The Bank of Thailand will monitor the situation closely at a difficult period for Thais in order to maintain confidence in the financial market, so the foreign exchange and bond markets can run smoothly without any bumps,” he said. “The BOT stands ready to support the liquidity of the Thai baht against the [US] dollar.”
Uncertainty over the health of Bhumibol roiled Thailand’s stock market earlier this week.
The benchmark SET index rose more than 4 percent yesterday, with analysts saying it had been oversold amid anxiety over the king’s health, while the baht also staged a rebound against the US dollar.
“The uncertainties and political risks have been more or less priced in,” Margaret Yang (楊燕), an analyst at CMC Markets in Singapore, told Bloomberg News.
“We may still see some panic selling, but I don’t expect this to last for very long. Eventually smart money will flow in to support the market.”
However, experts warned that the longer-term picture is less certain as Thailand remains a deeply polarized country with the recent stability a result of strict military bans on political activities and dissent.
According to government figures, Thai economy grew 2.8 percent last year following record tourist arrivals and a ramp-up in infrastructure spending by the junta-led government.
However, while that is three times quicker than in 2014 — when protests and the coup tripped up the economy — it is still a lot slower than the 6.5 percent seen in 2012.
There is also concern about the immediate impact on the key tourism sector during the mourning period after the government asked the public “to refrain from holding entertainment activities for one month.”
The tropical kingdom’s notoriously rowdy nightlife, red-light districts and beach partying on its southern islands are top draws for a tourism industry that has kept the economy afloat as other sectors fell flat.
“Widespread closures of domestic businesses for several days are likely to occur, including many tourism companies,” the Economist Intelligence Unit (EIU) said.
The EIU said that it expected a slowdown over the next 12 months.
“Consumer demand will fall sharply in the coming weeks,” it said.
Additional reporting by AFP
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