Baht Falls Most in a Week on Concern Protests to Spur Outflows

Thailand’s baht fell the most in a week on concern overseas investors will keep pulling money from the nation’s assets as anti-government protests that began late October show no sign of abating.

The Bank of Thailand cut this year’s growth forecast to about 3 percent yesterday from a November prediction of 4 percent after unexpectedly holding its policy rate at 2.25 percent. Prime Minister Yingluck Shinawatra declared a 60-day state of emergency in Bangkok on Jan. 21 as she sought to combat violent attacks that threaten to derail elections scheduled for Feb. 2. Global funds pulled a net $195 million from local bonds and equities this month, official data show.

“We will most likely see continued fund outflows from Thailand and the baht is staying on a downward trend,” said Tsutomu Soma, manager of the fixed-income business unit at Rakuten Securities Inc. in Tokyo. “There’s no clear picture of the protests ending or the situation improving, while we don’t even know if the elections can be held as scheduled.”

The baht dropped 0.2 percent, the most since Jan. 15, to 32.931 per dollar as of 3:54 p.m. in Bangkok, according to data compiled by Bloomberg. The currency has weakened 5.5 percent since the protests began on Oct. 31. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, rose 10 basis points, or 0.1 percentage point, to 7.32 percent.

Fourteen of 21 analysts surveyed by Bloomberg had expected the central bank to cut its policy rate by 25 basis points, while the rest forecast no change.

Tourism Hit

Bombings at anti-government rallies and shootings in the capital have killed one person and injured 70 since Jan. 17. Suthep Thaugsuban, a former opposition party lawmaker leading the protests, vowed to continue blockades of major intersections in Bangkok that began on Jan. 13.

Thailand last saw a state of emergency to combat protests in 2010, when Suthep’s Democrat party held power and oversaw a crackdown on protesters loyal to Thaksin Shinawatra, Yingluck’s brother, that killed more than 90 people.

The central bank expects some impact on the economy from the protests, spokeswoman Roong Mallikamas said in an interview with Bloomberg Television today. Tourist arrivals to Bangkok have fallen 20 percent since Jan. 13, the first day of the blockades, from the same period a year earlier, and travel agencies will see more cancellations after a state of emergency was declared, Sisdivachr Cheewarattanaporn, president of the Association of Thai Travel Agents, said yesterday.

The yield on the 3.125 percent government bonds due December 2015 rose one basis point to 2.43 percent, according to data compiled by Bloomberg.

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