Indian share prices plunged in late trade to end down 3.61 per cent. Singapore's Straits Times Index fell 1.83 per cent, the Kuala Lumpur Composite Index lost 1.2 per cent, and Taiwan's Weighted Price Index dipped 2.65 per cent.

The Stock Exchange of Thailand (SET) composite index started the day with a sharp drop to 651.91 and ended at 653.02, or down 1.3 per cent, off an intra-day low of 650.69. Turnover was thin at Bt7.78 billion.

However, foreign investors yesterday bought Thai shares with a net position of Bt239.13 million after selling them for two consecutive trading sessions.

During a seminar on the trend of the value of the baht yesterday, Yoot Khunsihapak, from the Bank of Thailand's (BOT) domestic financial markets division, said net inflows invested in the stock market totalling Bt115 billion from January to May had helped boost the value of the baht.

However, since May, capital outflows from the sale of Thai stocks by foreign investors has weakened the baht.

Yoot said the central bank believes that Asian currencies, including the baht, would strengthen in line with the Chinese yuan, which is expected to continue to appreciate, while the US dollar is likely to weaken further.

This is the consequence of interest-rate hikes by the Bank of Japan and the European central bank.

Satian Tantana-sarit, TMB Bank treasurer, at the same seminar predicted that the Bank of Thailand's Monetary Policy Committee is likely to keep its policy rate unchanged at 5 per cent.

He said the gap between the US Federal Reserve's policy rate of 5.25 per cent, and the BOT's policy rate is still narrow.

However, if the US Fed hikes its policy rate again in August, the wider gap would put pressure on the BOT to raise rates.

Satian said the baht had weakened over the past two weeks due mainly to the softer yen as investors sold the currency in anticipation of the Bank of Japan raising its policy rate for the first time in six years.

Siriporn Chanjindamanee

The Nation