Baht drops to lowest since June 2010

The baht fell to its weakest level since June 2010 in offshore trading on concern political turmoil will worsen after the army chief refused to rule out a coup following deadly street protests.

Anti-government demonstrators have been calling for the military to back their bid to oust caretaker Prime Minister Yingluck Shinawatra's government and set up an unelected council tasked with erasing her family's political influence.

"The army is at a difficult crossroad,'' army chief Gen Prayuth Chan-ocha said at a Dec 27 briefing. Three people were killed and more than 150 injured last week amid protests and rioting in Bangkok.

The baht dropped 0.3% to 32.95 per dollar as of 12.41pm in Singapore (11.41am Thailand time), according to prices compiled by Bloomberg, and earlier touched 32.96, the lowest level since June 2010.

The currency has lost 7.2% this year, its worst annual performance since 2000. Onshore financial markets are closed for holidays through Jan 1.

"The baht can still depreciate further because it doesn't seem like the political problems will be going away anytime soon," said Leo Chan, head of regional foreign-exchange and interest-rate trading in Hong Kong at ABN Amro Bank NV. "The army could step in. As we have seen in the past, this will resolve itself peacefully but the baht could weaken some more before we eventually see that."

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, fell two basis points, or 0.02 percentage point, to 6.56%.

The measure has risen 75 basis points since Oct 31, when Ms Yingluck's opponents began street demonstrations accusing her of economic mismanagement and seeking to introduce a law that would exonerate her brother Thaksin, who was ousted as premier in a 2006 military coup and later convicted of abuse of political power. She dissolved parliament on Dec 9.

Thaksin is accused of controlling the government from overseas, through his young sister. 

Global funds sold US$1.26 billion more Thai shares than they bought this month as Ms Yingluck's move to call for a snap election sparked street protests and the Election Commission urged the government to delay the Feb 2 poll.

Share your thoughts

Discussion 1 : 11/01/2014 at 03:17 PM
I'm selling my hoard of dollars at 35
Discussion 2 : 31/12/2013 at 03:02 PM
I'm a little confused. When the sale is made in dollars at the market price, so the rice will not be cheaper
Discussion 3 : 30/12/2013 at 06:18 PM
Another coup would create a cheaper baht and increase Thaksin's wealth. That way he can buy more votes in future elections, so the PDRC's moves to weaken Thaksin actually are making him stronger. Guess the PDRC is still playing checkers whennThaksin is playing chess. I think that is checkmate boys, if you do nothing, you open the door for Thaksin to come back and if you protest you increase his wealth and loose. The only chance you have is to accept democracy and win the election, but since the dems are boycotting the election that is not likely.
Discussion 4 : 30/12/2013 at 04:59 PM
What , why care, pray to Buddha yes..?
Discussion 5 : 30/12/2013 at 04:57 PM
Baht is overvalued anyway... Go down, sweet little baht, go down
Discussion 6 : 30/12/2013 at 04:55 PM
Tongue in cheek I hope
Discussion 7 : 30/12/2013 at 04:49 PM
The lower baht will help Thailand to sell rice on the international markets.
Discussion 8 : 30/12/2013 at 03:20 PM
Very much in line with the depreciation of other emerging markets currency. Even developed countries like Australia is not spared the outflow of easy money from US stimulus package.
Discussion 9 : 30/12/2013 at 03:01 PM
Thailand has no democracy and this is only one of the reason, why the baht dives. Rice scam, warnings from moodys, IMF and so on. Would you invest in a country where the government is doing what they want? I shure wouldn't!
Discussion 10 : 30/12/2013 at 02:48 PM
The fundamentals are strong the baht is ok...the rice is of the highest quality...exports will problems with the prawns...the price of food has not problems with bad debt on are selling like crazy..thai gold is not overpriced as gold falls 30 per cent in the real world..some one needs shaking.
Discussion 11 : 30/12/2013 at 02:25 PM
An army is made up of voters not brainwashed fanatics. Farangs should not panic, and should not dump Baht, Feb 2nd elections will happen, democracy will survive.
Discussion 12 : 30/12/2013 at 02:23 PM
with no money left in the kitty and a unsustainable rice vote buying scam,which has cost the tax payers 1 trillion baht so far,its evitable the baht will weaken,those who implemented the disastrous scheme must be made accountable for their own failings,and be replaced immediately,what say you ricefield,alas no comments from the government supporters,this isn't spinning or blame game,its the realities of a corrtupt regime,and its about to get worse
Discussion 13 : 30/12/2013 at 02:11 PM
Great! Apart from scamming tourists and rice policy, what else are they good at? Inflating speculation but no innovation and invention.

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