Bangkok Post – Baht declines in thin holiday trading across Asian markets

Emerging Asian currencies slipped in holiday-thinned trade on Monday, with the Thai baht leading the declines, as the dollar stayed firm and China data pointed to an uneven recovery in the world’s second-largest economy.

Trading was dull across Asia as markets were closed in Singapore, Malaysia, Indonesia, the Philippines and India.

The baht fell up to 0.5%, tracking weakness in gold prices, while the South Korean won and the Taiwan dollar traded marginally lower.

“For the Thai baht specifically, there could be some pressures from gold-related flows as gold prices have moved lower from Friday levels,” said Poon Panichpibool, a markets strategist from Krung Thai Bank.

Also, political turbulence in Southeast Asia’s second-largest economy is likely to weigh more on its assets, including a court case that could potentially lead to the prime minister’s dismissal.

“The rise in political uncertainties has already weighed on investor sentiment, with Thailand’s currency and equity markets among the region’s worst performers in the year-to-date,” analysts from ANZ said in a client note.

Mr Poon said the baht could face more pressure from foreign fund outflows as the political turbulence will prevent foreign investors from buying Thai assets, even as its stocks and bonds seem to have a somewhat attractive valuation.

Meanwhile, the Chinese yuan traded flat while shares were down about 0.6%, as investors digested weaker-than-expected data showing the property sector remained a pain, and with the People’s Bank of China leaving a key policy rate unchanged as expected.

Globally, investors are awaiting the US May retail sales numbers on Tuesday in a data-light week for cues on when the central bank will cut interest this year.

The Federal Reserve last week published updated projections showing that median forecast from all 19 US central bankers was for a single rate cut this year.