Baht continues to fall

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.

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The Bank of Thailand cut this year’s growth forecast to about 3% on Wednesday from a November prediction of 4% after unexpectedly holding its policy rate at 2.25%. Caretaker Prime Minister Yingluck Shinawatra declared a 60-day state of emergency in Bangkok on Tuesday as she sought to combat violent attacks that threaten to derail elections scheduled for Feb 2. Global funds pulled a net US$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 0.3%, the most since Jan 15, to 32.967 per dollar as of 9.28am, according to data compiled by Bloomberg. The currency has weakened 5.6% since the protests began on Oct 31. 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 7.2%.

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.

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