The Thai economy, stock market and its currency, the Thai Baht, plummeted after the nation’s capital of Bangkok suffered a deadly bomb blast.
On Tuesday, one day after the bombing, the SET opened down 2.7% at 1,408 and closed at about 1,371. The heightened uncertainty after the Monday blasts could also be seen in the price of the Thai Baht and planned tourist arrivals to Bangkok.
The Thai baht has fallen to its weakest level in over six years. It now stands at 35.65 against the U.S. dollar, the lowest since March 2009.
Stephen Innes, a senior trader at the financial technology company OANDA, added that this new incident is just another one in the string of struggles the Thai currency has gone through. The other most recent struggle was the surprise Yuan devaluation that took place last week.
The bad news, however, does not end there. Speculations that the tourism industry would be very negatively affected are no longer just speculations. According to Thai Airways International (THAI), one in five travellers booked changed their flight plans for Thailand after the incident. The airline President, Charamporn Jotikasthira said so on Wednesday, also adding that there were no flight cancellations following the bomb blast.
With China’s economy slowing down and the possibility of the U.S. Federal Reserve raising interest rates, investors have pulled out of many emerging markets such as Thailand over the past few weeks. Interest in Thai stocks is likely to wane, negatively affecting the currency as well.
Thai Economy Hit By Bomb
The incident killed at least 22 people, including nine tourists, and wounded more than 120 people. The bomb went off at the Erawan shrine at a bustling central Bangkok intersection in an affluent neighborhood with upscale shopping malls and hotels nearby.
Police later discovered video footage showing a man in a yellow shirt leaving a backpack in the Erawan shirne, the backpack is believed to be the source of the explosion. The suspect did not have the appearance of a Thai and the details of the bombing were “quite different” from the frequent bombings previously carried out by southern Thai insurgents.
Police General Somyot said that this was definitely an organized activity which involved both Thais and foreign nationals.
With its GDP growth rate already revised down to 3% from the previous 3.8%, the nation faces even bigger challenges. Improving the Thai economy will take a lot of effort.
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