By Clarissa Batino
Nov. 26 (Bloomberg) -- Thailand’s baht slid to the lowest since February 2007 after an airport explosion injured at least four people and led airlines to cancel Bangkok flights, eroding confidence in Southeast Asia’s second-biggest economy.
The baht was the biggest loser among the 10 most-active regional currencies outside of Japan after anti-government protesters stormed the main terminal at Bangkok’s international airport. The People’s Alliance for Democracy is demanding the resignation of Prime Minister Somchai Wongsawat.
“The political turbulence will weaken investors’ appetite for Thai stocks and assets,” said Radhika Rao, an economist at IDEAglobal Ltd. in Singapore. “This is coming at a bad time when economic growth is slowing.”
The baht lost 0.3 percent to 35.31 per dollar as of 9:07 a.m. in Bangkok, according to data compiled by Bloomberg. The currency may fall to 35.50 as early as today, Rao said.
“Once the baht breaks the 35.80 level, the next target would be 36 and I wouldn’t rule that out,” IDEAglobal’s Rao said. The central bank may buy its own currency to curb declines, she said.
The economy expanded at the slowest pace in almost seven years in the third quarter, the Bangkok-based National Economic & Social Development Board said this week. Gross domestic product increased 4 percent in the three months to Sept. 30 from a year earlier and growth may weaken to less than 3 percent next year as the global recession cools exports, the government said.
The demonstrators, who want Somchai to take responsibility for deadly clashes with police last month, may spur him to declare a state of emergency to prevent escalating violence. The prime minister, set to return today from the Asia-Pacific Economic Cooperation forum in Peru, has rejected calls for his resignation. Police have avoided using force since the Oct. 7 clash in which two people died and 470 were injured.
To contact the reporter on this story: Clarissa Batino in Manila at cbatino@bloomberg.net.
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