Thailand: Baht drops to 34.69 - weakest in a month
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The baht has dropped to 34.69 to the US dollar, its weakest in one month, since foreign investors continued to sell off Thai stocks and bring the money out of the country, according to a money dealer
The dealer of Kasikornbank said the baht had further depreciated to stay in a range of 34.67-34.68 to the dollar in the morning trading session compared with 34.50 to the dollar in Thursday’s trading.
It had weakened in the same direction with other currencies in the region as foreign capital continued to flow out of the Stock Exchange of Thailand and other stock markets in Asia in large amounts.
There was also a rumour in the financial market that a group of seven leading industrialised nations or G-7 would hold an urgent meeting this weekend to discuss ways to solve sub-prime lending woes in the United States.
Earlier, central banks of Europe, Japan, and US had injected a large amount of money to boost liquidity in the financial sector affected by the sub-prime lending crisis. But the situation had not improved, which undermined investor confidence.
The dealer said the baht was likely to further weaken to 35.20 to the dollar soon.
Meanwhile, Bank of Thailand Governor Tarisa Watanagase said the baht had weakened to hover around 34.60 to the dollar partly because foreign investors had dumped Thai shares and shifted the money out of the country.
She said measures issued earlier by the central bank to curb the baht’s volatility had also fuelled the foreign capital outflow. However, the bank would closely monitor the situation.
Mrs. Tarisa said the central bank would also keep a close watch on the sub-prime lending crisis in the US because it was uncertain how the problem would drag on, or escalate.
Although the sub-prime mortgage loan crisis would ignite a liquidity crunch in many major countries’ financial sectors, she said, Thailand had not experienced the problem.
So, the central bank saw neither need to inject money into the financial system nor issue any special measures to oversee the problem because it had an only indirect effect on Thailand.
The upheaval in world financial markets triggered by rising defaults on subprime mortgages in the United States has spread at a lightning speed. This midsummer nightmare has caused huge losses to shaken investors the world over.
Filed by Egor Ouzikov under Global Financial Crises, Exchange Rate Management and Monetary Policy