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Thai bonds suffer record outflows as king's death sparks concern

Monday, October 17, 2016 - 12:12
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Global funds sold a record US$1 billion of Thai bonds last week as the passing of King Bhumibol Adulyadej marked the loss of a stabilising influence in the nation's political landscape.

[KUALA LUMPUR] Global funds sold a record US$1 billion of Thai bonds last week as the passing of King Bhumibol Adulyadej marked the loss of a stabilising influence in the nation's political landscape.

The baht rounded off its biggest five-day drop in a year last week as the currency slid to the lowest since January after the death of the 88-year-old monarch whose seven-decade reign helped to unite the country rocked by 10 coups.

The selling in Thai debt pared inflows this year to US$10.7 billion, according to data compiled by Bloomberg.

"The selling is overdone because I just think that it's not going to be a consequential economic development for Thailand," said Tim Condon, head of Asian research at ING Groep in Singapore. "It's obviously a special time for Thai people and this is a very delicate transition, but I expect it to be a smooth one for financial markets."

National development efforts will continue while Thais mourn the passing of their king, and the Cabinet will meet as scheduled on Tuesday, government spokesman Sansern Kaewkamnerd told reporters in Bangkok on Sunday.

The baht fell 0.1 per cent to 35.375 per dollar as of 10am in Bangkok, according to data compiled by Bloomberg.

It resumed losses after a two-day gain as Asian currencies weakened on rising bets for a US interest-rate increase, and declined 2 per cent in October.

Tens of thousands of Thais flooded the streets of the capital over the weekend to pay respects to the king as his body was transported from the hospital to the palace.

Prime Minister Prayuth Chan-Ocha sought to restore calm, saying the monarch's death and a delay in his son taking the throne will not derail plans for a return to elections which had been scheduled from late 2017.

BLOOMBERG