Situations worsen – Tough time for Thai currency

It is tough time for Thailand. With the political situations at a turmoil, the Thai currency, Baht, fell to its lowest level in more than a year and shares dropped to a 19-month low as investors fled to the safety of government bonds. So grave is the situation that Thailand’s central bank has been forced to intervene in the foreign exchange market to support the country’s currency, the baht.

It happened after emergency rule was declared in the capital Bangkok following a week of anti-government protests. The People’s Alliance for Democracy is seeking Mr Samak’s resignation.

The Bank of Thailand said the domestic currency had slipped during morning trading after the Prime Minister Samak Sundaravej invoked the emergency decree. The deputy governor Atchana Waiquamdee said that the economy would doubtless be affected by the ongoing political turmoil in the capital but could not predict to what extent until the situation had unfolded further.

The violence has raised the probability of a negative action on the country’s credit ratings, Standard & Poor’s credit analyst Kim Eng Tan said in a report. The debt is rated BBB+, the eighth highest investment rating, with a stable outlook.

With the situation as this, it is quite likely that tourism and foreign investment would decline very much giving a further blow to the country’s economy.