Thai Baht, Stocks, Bonds Fall This Week on Political Concern

Thailand’s baht had a fourth weekly loss as stocks and sovereign bonds dropped amid concern political unrest will further damp economic growth.

The currency fell to a two-month low and 10-year yields reached the highest level since September on speculation the Federal Reserve is moving closer to reducing stimulus that’s spurred inflows to emerging markets. The SET Index of equities dropped this week by the most since September as the Constitutional Court ruled against the government’s attempt to establish a fully elected Senate. The opposition plans to hold a major protest this weekend, Suthep Thaugsuban, a former deputy prime minister of the Democrat Party, said yesterday.

“Sentiment for the baht and Thai assets is weak due to the political uncertainty,” said Koji Fukaya, chief executive officer and currency strategist at FPG Securities Co. in Tokyo. “Speculation Fed tapering will come sooner rather than later is negative for emerging markets.”

The baht depreciated 0.8 percent from a week ago to 31.835 per dollar as of 4:42 p.m. in Bangkok, according to data compiled by Bloomberg. The currency, which lost 0.1 percent today, touched 31.85 earlier, the weakest level since Sept. 17. The SET Index dropped 4.3 percent this week and 1.2 percent today to 1,359.07, its lowest close since Sept. 6.

The opposition Democrat Party is seeking to remove Prime Minister Yingluck Shinawatra, Deputy Prime Minister Plodprasop Suraswadi and Interior Minister Charupong Ruangsuwan for alleged corruption. It also filed a motion of no-confidence against Yingluck and Charupong, with a debate scheduled for Nov. 26-27.

‘More Tense’

Yingluck postponed a visit to Singapore scheduled for those days because of the pending no-confidence vote, government spokesman Teerat Ratanasevi said. Yingluck’s Pheu Thai party commands a majority in parliament.

Thai politics will become “more tense over the coming weeks with a major anti-government rally at the weekend and the censure motion,” said Athaporn Arayasantiparb, head of research in Bangkok at UOB Kay Hian Securities (Thailand) Pcl. “Most investors will stay on the sidelines and assess how the political situation develops before they begin buying Thai stocks again. The stock market is in a very volatile period.”

Thailand’s National Anti-Corruption Commission will set up a committee to investigate petitions to remove House speaker Somsak Kiatsuranont and Senate speaker Nikom Wairatpanij, NACC member Prasart Pongsivapai said yesterday.

The government cut its 2013 expansion forecast on Nov. 18 to 3 percent from a range of 3.8 percent to 4.3 percent projected in August.

FOMC Minutes

The U.S. central bank’s $85 billion of monthly bond purchases might be reduced as the world’s largest economy improves, minutes of the policy-setting Federal Open Market Committee’s Oct. 29-30 meeting showed this week.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, increased 14 basis points, or 0.14 percentage point, this week and today to 6 percent.

The yield on Thailand’s 3.625 percent bonds due June 2023 climbed 16 basis points from Nov. 15 to 4.207 percent, data compiled by Bloomberg show. The rate, which reached a two-month high of 4.218 percent yesterday, declined one basis point today.

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