Thai stocks dumped, currency weakens as investors turn to USD

BANGKOK, 26 May 2010 (NNT) — The Thai baht has weakened as foreigners turned to the US currency following concerns of the Eurozone debt crisis and North and South Korea’s bitter relations, according to a Bank of Thailand (BoT) official.

Stocks have experienced a huge sell-off as foreigners are pressurized by the weakening Thai currency. In the beginning of the year, the Thai currency strengthened by 3%, but has now declined to 2%.

However the BoT Director of Exchange Control & Credits Department Wongwatoo Potirat said that even though the Thai currency has weakened, it has not dipped down as low compared to the Malaysian currency.

Meanwhile, 70% of the capital inflows worth a total of 50 billion THB from overseas have flooded the Thai markets amid the political crisis and has now been sold, to buy US dollars, leading to capital outflows. The investores have shifted their investments to bond and non-voting depository receipt (NVDR), Ms Wongwatoo said.