Baht Falls a Second Week as Thai Stocks Drop on Political Unrest

Thailand’s baht fell for a second week to reach the lowest level since 2010 and the benchmark stock index led losses in Southeast Asia on concern worsening political unrest will spur further capital outflows.

Global funds sold $77.6 million more Thai shares than they bought yesterday, the most in almost two weeks, after the Election Commission urged the government to delay a Feb. 2 poll as protesters sought to block candidates from registering. One person was killed and 128 injured in an ensuing riot. Investors pulled $6.2 billion from Thai equities so far this year, the most among 11 Asian markets tracked by Bloomberg. Government bonds rose this week.

“The baht is driven by political sentiment and portfolio flows,” said Saktiandi Supaat, Singapore-based head of foreign-exchange research at Malayan Banking Bhd. “We’re particularly watching equity flows, which seem quite concerning.”

The currency weakened 0.8 percent during the five days to 32.863 per dollar as of 4:27 p.m. in Bangkok and touched 32.873, the lowest level since June 2010, data compiled by Bloomberg show. It was little changed today, bringing this year’s loss to 6.9 percent, the worst annual performance since 2000.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, climbed 50 basis points, or 0.5 percentage point, from Dec. 20 to 6.74 percent.

Manufacturing Drops

An index of Thai manufacturing contracted 10.6 percent in November from a year earlier, the biggest decline since September 2012, the central bank reported today. That was less than the median estimate in a Bloomberg survey for an 11.4 percent drop.

Thailand’s SET Index (SET) lost 1.1 percent today to 1,293.94 headed for the lowest close since Aug. 28. Property developers and banks led the declines, with Central Pattana Pcl dropping 2.8 percent and Siam Commercial Bank Pcl (SCB), the nation’s largest lender by market value, falling 3.5 percent.

Opponents of Prime Minister Yingluck Shinawatra began street demonstrations on Oct. 31, accusing her of economic mismanagement and seeking to introduce a law that would exonerate her brother, Thaksin Shinawatra, who was ousted as premier in a 2006 military coup and has lived overseas since fleeing a 2008 jail sentence for corruption. Yingluck dissolved parliament on Dec. 9 in a bid to ease tensions, triggering an election that by royal decree is scheduled for Feb. 2.

The yield on Thailand’s 3.625 percent bonds due June 2023 dropped 11 basis points this week to 3.92 percent, the lowest level since Oct. 30, data compiled by Bloomberg show.

To contact the reporter on this story: Yudith Ho in Jakarta at yho35@bloomberg.net

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net

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