By Shanthy Nambiar
April 17 (Bloomberg) -- Thailand’s baht fell as the government maintained a state of emergency for a sixth day and global funds sold the nation’s assets on concern the political turmoil with deepen.
The currency has slid 1.5 percent in the past three months, the second-worst performance among the 10 most-active Asian currencies excluding the yen, as protests undermined the government’s ability to counter the economic slump. Fitch Ratings and Standard & Poor’s cut the nation’s debt ratings this week. Sondhi Limthongkul, the Thai media owner whose protest group helped oust three prime ministers, was shot and wounded in an assassination attempt today.
“Recent events have just reaffirmed our bearish view on the baht,” said Usara Wilaipich, a Bangkok-based economist at Standard Chartered Bank Plc. “The risk for the gross domestic product is still on the downside.”
The baht weakened 0.2 percent to 35.44 per dollar as of 11:48 a.m. in Bangkok, and was little changed from last week, according to data compiled by Bloomberg. It may decline to 37 by the end of June, Usara said.
The currency may retreat to 36.5 by the end of this year, according to the median estimate of 18 analysts in a Bloomberg News survey.
Fitch lowered its rating for Thai foreign-currency debt yesterday by one level to BBB, the second-lowest investment grade, the first downgrade since the 1997-1998 Asian financial crisis. Standard & Poor’s Ratings Services earlier this week trimmed the local-currency rating by one level to A-.
Assassination Attempt
Troops broke up violent demonstrations in Bangkok this week, ending a siege of the premier’s office and leaving two dead and 135 people injured. Sondhi, a supporter of Prime Minister Abhisit Vejjajiva, leads opposition to the return of former Thai leader Thaksin Shinawatra, now living in exile.
“The inability of successive governments to resolve disruptive civil unrest” has led to a deterioration in Thailand’s creditworthiness, Vincent Ho, an associate director in Fitch’s sovereign group, said yesterday.
Global funds sold 2.7 billion baht ($76 million) more Thai stocks than they bought yesterday, the most since Sept. 4, according to stock exchange data.
Thailand’s economy may contract between 4.5 percent and 5 percent this year, more than an earlier forecast, the Nation reported, citing Finance Minister Korn Chatikavanij. Korn had earlier said the economy may shrink 3 percent in 2009.
“We could see negative GDP growth every quarter,” said Standard Chartered’s Usara, who expects the economy to shrink 3.5 percent this year.
Consumer confidence fell in March to the lowest level in more than seven years, the University of the Thai Chamber of Commerce said on April 9.
To contact the reporters on this story: Shanthy Nambiar in Bangkok at snambiar1@bloomberg.net.
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