Thai Baht, Stocks, Bonds Drop on Anti-Government Protests

Thailand’s baht fell to a 10-week low and the stock index had its worst close in two months after foreign funds pulled money from local assets amid concern political tension will intensify and harm growth.

Anti-government protests spread to government offices and television stations today after more than 100,000 people joined rallies yesterday against Prime Minister Yingluck Shinawatra. Global funds pulled a net $2.1 billion from Thai bonds and equities this month through Nov. 22, official data show. Signs the Federal Reserve will taper stimulus also contributed to a 2.7 percent drop in the baht and a 35 basis point increase in the 10-year bond yield in November.

The baht fell 0.5 percent to 31.98 per dollar as of 4:43 p.m. in Bangkok, according to data compiled by Bloomberg. It touched 32.003, the weakest level since Sept. 12. The SET Index of shares slumped 0.5 percent to 1,352.86, its lowest close since Sept. 6, and the yield on the 3.625 percent notes due June 2023 climbed seven basis points to 4.28 percent.

“Investors want to stay away from Thailand amid concern the protests will intensify or lead to violence again like last time,” said Shigehisa Shiroki, chief trader on the Asian and emerging-markets team at Mizuho Bank Ltd. in Tokyo. “Risk sentiment wasn’t strong to begin with due to the Fed’s tapering talk, and the political concern encouraged investors to take some money out from Thailand.”

Amnesty Bill

Thai police spokesman Piya Utayo said forces are being mobilized to counter a rally at the Ministry of Finance in Bangkok as more than 100 anti-government protesters entered the compound on Bangkok’s Rama 6 road earlier today.

Government opponents started street rallies in Bangkok last month to oppose legislative efforts that they said would benefit Yingluck’s brother, Thaksin Shinawatra, who was ousted as premier in a 2006 coup and has lived in self-imposed exile overseas since fleeing graft charges in 2008. Yingluck’s administration has struggled to contain weeks of protests against a bill that would have provided amnesty for most political offenses stretching back to the 2006 coup and a separate move to make the senate fully elected.

The purpose of the demonstrations has switched in the past week from opposing those legislative efforts to ending “suffering under the rule of Thaksin and his people,” Suthep Thaugsuban, a former member of the opposition Democrat Party who resigned this month to lead the protests, said yesterday.

“The government has instructed police and all security officers to handle the situation gently, based on international practices, so the demonstration won’t be used as a tool by people who want to make changes in a non-democratic way,” Yingluck said yesterday on her official Facebook page, remarks that were confirmed by her office.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, declined two basis points, or 0.02 percentage point, to 6 percent.

Thailand’s economy grew by 2.7 percent in the third quarter from a year earlier, the slowest pace since the first three months of 2012, official data show. The government cut its 2013 expansion forecast to 3 percent last week, from an earlier projection of as much as 4.3 percent.

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