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Thailand: Baht at 7-month low on political uncertainty
The Thai baht weakened to a seven-month low on Wednesday as political uncertainty dampened investor appetite, while most other emerging Asian currencies also depreciated against a firmer dollar after resilient US data eased recession concerns.
Equities in the region were largely in the red, with shares in Seoul taking the biggest hit, declining 0.8%, while those in the Philippines and China lost 0.3% and 0.5%, respectively.
The baht depreciated 0.6% to hit its lowest level since Nov 30, 2022, as doubts linger over whether the leading candidate could secure enough votes to become prime minister in the new parliament’s first session next week.
“It is unlikely that the (Move Forward) coalition has the necessary votes to go ahead to form a new government,” said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.
The political stalemate and uncertainty in Thailand would drag on if the country does not get a new government by next week, Tan added.
The Bank of Thailand (BoT) said on Tuesday it will further relax foreign exchange regulations in the second half this year to encourage capital outflows as baht continues to be volatile. The currency has lost 2.2% so far this year.
Elsewhere, the South Korean won fell 0.3%, while the Philippines peso and Singapore dollar slipped 0.2% and 0.1%, respectively.
In the United States, data showed consumer confidence increased in June to the highest level in nearly 1-1/2 years, indicating the economy remained on solid footing despite fears of a recession.
“All major data in the US definitely raises bets that there is a possibility of the US Fed hiking interest rates again in July and that they will not be cutting the interest rates quickly this year also,” added Tan.
The Chinese yuan inched up 0.04% after signs that the central bank has grown increasingly uncomfortable with the recent slide in the currency.
Source: https://www.bangkokpost.com/business/2601153/thai-baht-at-7-month-low-on-political-uncertainty-equities-mixed