By Clarissa Batino
Nov. 27 (Bloomberg) -- Thailand's baht fell, touching a 21- month low, and stocks declined after anti-government protesters seized and closed two Bangkok airports and the prime minister rebuffed army demands that he resign.
The baht declined a second day as Prime Minister Somchai Wongsawat rejected calls from Army Chief Anupong Paojinda to step down and hold early elections. The People's Alliance for Democracy, seeking to oust Somchai, now occupies Bangkok's international airport, the prime minister's ceremonial and temporary offices and Don Mueang Airport, which mainly handles domestic flights.
``The political situation would put the Thai baht under more pressure, given that there's no clear resolution on how the situation would end,'' said Euben Paracuelles, an economist at Royal Bank of Scotland Group Plc in Singapore. ``We see further weakness for the baht.''
The baht dropped 0.4 percent to 35.36 versus the dollar as of 1:36 p.m. in Bangkok, according to data compiled by Bloomberg. It earlier touched 35.39, the weakest level since February 2007.
The SET Index was down 0.7 percent at 392.67 at the midday break, one of only two benchmark stock measures to fall in Asia. Airports of Thailand Pcl led declines.
Bank of Thailand Governor Tarisa Watanagase said today the central bank is ``taking care'' of the baht and that it's moving in tandem with regional currencies. The baht has dropped 16 percent this year, the fourth-worst performance among the 10 most-traded currencies in Asia outside Japan.
``We need to protect and restore democracy,'' Somchai said in an address broadcast late yesterday on national television. ``The protesters are breaking laws as they are armed and have seized the airport, which is damaging the country.''
`Pretty Severe'
Southeast Asia's second-biggest economy faces a ``pretty severe'' impact from the political unrest, Paracuelles said.
``My forecast for 2009 GDP growth is 1.6 percent, which is already quite low as it reflects the headwinds from the global recession and sluggish domestic demand,'' he said. ``These political events unfolding put a further downside to that forecast.''
The baht may fall to 35.50 by the end of the year and slide to 36.50 by the end of 2009, the economist added.
Airports of Thailand, the country's largest airport operator, slid 2.8 percent to 17.40. Thai Airways International Pcl, the nation's biggest carrier, dropped 1.3 percent to 7.50 baht. The airline is losing about 500 million baht ($14 million) a day in sales due to the closures, Transport Minister Santi Prompat said yesterday.
The SET index has lost 54 percent since May 25, when protesters first took to the streets to oust the current government, and is set for its worst year since the financial crisis in 1997.
To contact the reporter on this story: Clarissa Batino in Manila at cbatino@bloomberg.net.
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