Baht Posts Weekly Decline as Protests Hurt Tourism, Economy

Thailand’s baht posted its biggest weekly loss in three after Prime Minister Yingluck Shinawatra imposed a state of emergency in Bangkok, worsening the outlook for tourism and the economy.

The Constitutional Court will rule today on whether an election set for Feb. 2 can be delayed amid escalating violence in the capital. The Tourism Council of Thailand estimates anti-government protests that started Oct. 31 may cost the local travel industry 22.5 billion baht ($685 million) this quarter. The central bank cut its 2014 economic growth forecast to about 3 percent this week from 4 percent, after unexpectedly holding its benchmark interest rate at 2.25 percent.

“The declaration of a state of emergency hurts tourism and the economic outlook, and that weighed on the baht,” said Disawat Tiaowvanich, a foreign-exchange trader at Bangkok Bank Pcl. “Markets got some support from a potential delay in elections, but that will only have a short-term impact.”

The baht dropped 0.2 percent this week to 32.859 per dollar as of 3:52 p.m. in Bangkok, according to data compiled by Bloomberg. The currency rose 0.1 percent today, paring its decline since Oct. 31 to 5.3 percent. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, rose five basis points from a week ago to 7.28 percent. The gauge was little changed today.

Protests Continue

The Constitutional Court said yesterday it accepted a petition from the Election Commission asking to determine whether the body or the government have the power to postpone the vote. Suthep Thaugsuban, an opposition politician leading the protests, has vowed to continue blockades of major Bangkok intersections that began on Jan. 13 until Yingluck resigns.

There have been no reports of major violence in Bangkok since Yingluck imposed the state of emergency on Jan. 22. Such a decree was last used to combat unrest in 2010, when the opposition Democrat party held power and oversaw a crackdown on protesters loyal to her brother, Thaksin Shinawatra.

The yield on the 3.125 percent government bonds due December 2015 declined one basis point, or 0.01 percentage point, to 2.42 percent today, according to data compiled by Bloomberg. The rate was steady this week.

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