BOT moves to stop baht's quick slide

The baht dropped quickly and fluctuated yesterday to its lowest level in more than a year after the government declared a state of emergency. It opened at 34.35 against the dollar and slipped dra¬matically, by 0.4 per cent to 34.45, at 10.47am.

The currency rebounded to 34.43 after the BOT intervened in the forex market. However, it was weaker again in the afternoon, to 34.49, a level not seen since August 23, 2007. The weakest point was recorded at 34.52 yesterday before closing at 34.49 to 34.51.

Dealers predicted that the baht was likely to fall further, to 35 with¬in this month. The currency fell by 2.1 per cent last month.

The central bank's deputy gov¬ernor Atchana Waiquamdee said the central bank had "taken care" of the foreign exchange market to reduce the baht's volatility and improve psychological factors.

"The unrest has had an impact on the baht. It is unlucky for the country. External factors have already worsened the economy but internal factors are aggravating it," said Atchana.

She said the situation had already had an adverse impact on tourism, trade as well as senti¬ment. "If the state of emergency brings about a rapid and ordered solution without anything we do not want to see, it would be better for the economy than a prolonged gloomy situation," said Atchana.

The benchmark 10year gov¬ernment bonds advanced yester¬day for a seventh day, pushing yields to a sixmonth low, as investors sought the relative safe¬ty of government debt. The yield on the 5.125 per cent note due March 2018 declined 7.5 basis points to 4.3 per cent, the lowest since March 7.