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Economy
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2006-12-20 23:08:50-05
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Baht drops most in three years
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Bangkok, Dec 21: Thailand's stock and currency markets have continued their volatile week after top politicians backed plans to limit the strength of the baht. On Thursday, Bangkok's SET stock index fell 2.4%. It had plunged 15% on Tuesday but rebounded 11% on Wednesday. The Thai baht fell 1.7% against the US dollar on Thursday, the biggest decline in three years. The volatility followed central bank plans to limit the amount of money that could be withdrawn by investors. Prime Minister Surayud Chulanont Thursday said he fully supported the Bank of Thailand's measures aimed at limiting speculation on the baht as well as its softening of those measures after it was found to have deterred both long-term foreign investment and short-term speculation. "The policy isn't flip-flopping," he told reporters. "There has been no change in policy. The policy is clear that we don't want to see the baht rise too much, as it would effect the overall economy." The baht was trading at 36.53 per U.S. dollar, down from a nine-year high of 35.09 Monday. The baht's strength has caused deep concern within Thailand's vital export sector. Tuesday's dramatic drop frightened regional markets with memories of the 1997 Asian financial crisis, which began in Thailand. But the markets recovered quickly and analysts downplayed such worries, arguing that the region's economic health is much better than it was a decade ago. However, this week's turmoil is expected to hurt foreign investor confidence in the military-backed government which came to power Sept. 19 after toppling Prime Minister Thaksin Shinawatra. "It definitely hurts Thailand's standing with the international investor community," said Marco Sucharitkul, president of JP Morgan Securities (Thailand). "Foreign investors will remain wary of Thai monetary and economic policies for the next few months. It does not help that the government was appointed by military coup makers."
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