Baht Volatility Expected in Wake of Coup

The baht seems to be quite strong so far, but it may not remain that way:

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BANGKOK, Sept 24 (TNA)

The Thai economy could slow in the fourth quarter due to this week's abrupt political changes, according to Anusorn Thammajai, advisor to BankThai's Research Office and President of BT Asset Management Co.

Mr. Anusorn said the baht is expected to be volatile in the short term in the aftermath of the power seizure staged Council for Democratic Reform under Constitutional Monarchy (CDRM).

However, the currency should stabilise further down the road as political tensions ease and the inflow of foreign investment picks up following the latest round of interest rates increase in the US, he said.

Mr. Anusorn predicts that the Thai economy will slow in the fourth quarter, as undemocratic changes hamper investment, affecting both tourism and sovereign credit ratings.

"The actions taken by the CDRM from now on will have significant bearings on the economy, the leading economist predicted.

"If the government is formed quickly, with a cabinet acceptable to all parties, and general election held quickly, investor confidence--both domestic and overseas--will return to benefit of the economy in the long run," he said.

In any case, the Thai economy is heading towards a brighter path in 2007, Mr Anusorn believes. This is due to the downward trend of inflation resulting from decreased oil prices and projected an export rise on the back of economic growth in Thailand's trading partners chiefly China and India.

Mr. Anusorn also sees domestic consumption and private sector investment on the up by the latter half of next year due to political stability and general election.

(TNA)-E007