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Thai markets steady after coup



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Thai markets steady after coup
forwardone Offline
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Thai markets steady after coup

Thai markets steady after coup

By FT reporters

Published: September 21 2006 04:25 | Last updated: September 21 2006 11:14

The Thai baht steadied and share prices recovered from early losses after financial markets reopened in Bangkok Thursday following a military coup endorsed by the country’s revered monarch King Bhumibol Adulyadej.

According to an announcement broadcast on Thai television Wednesday night, King Bhumibol issued a royal order backing the leader of the coup, army commander-in-chief General Sonthi Boonyaratkalin.

Emerging optimism that the coup may break the political stalemate that has paralysed the country for a year helped the baht recover from its losses Wednesday as local markets reopened after a one-day holiday decreed by the military.

The baht rose 0.8 per cent at 37.47 to the dollar in Bangkok, after dropping 1.4 per cent Wednesday in offshore trade. Stocks, which tumbled 4 per cent immediately after the market opened, later recouped most of the losses, with the SET index closing down 1.4 per cent.

“This represents a buying opportunity as it removes the political roadblock from the economy,’’ Richard Yetsenga, a currency strategist at HSBC Holdings Plc in Hong Kong told Bloomberg. “The coup is as calm as you could possibly expect and has royal approval.’’

Global ratings agency Moody’s Investors Service affirmed Thailand’s ratings on Thursday with a stable outlook, saying the country’s financial and external payment positions should be strong enough to withstand any adverse impact caused by the coup. Moody’s affirmation was in contrast to the decision by rivals Standard & Poor’s and Fitch Ratings, which have put Thailand’s ratings on review for possible downgrade.

Gen Sonthi, who launched the bloodless coup late Tuesday while the country’s prime minister Thaksin Shinawatra was in New York, has promised to step down in two weeks, saying he would appoint an interim premier to run the country until parliamentary elections are held under a new constitution in October 2007.

The coup has still not received the support of the US and other key international partners. “There’s no justification for a military coup in Thailand or in any place else,” said State Department deputy spokesman Tom Casey. “We certainly are extremely disappointed by this action. It’s a step backward for democracy in Thailand.

“We want to see a resolution of this situation in accordance with the rule of law and in accordance with democratic procedures - that certainly means the restoration of civilian rule in Thailand as quickly as possible.”

Mr Thaksin, who had been visiting New York for the annual meeting of the United Nations, flew Wednesday to London, where he owns a flat and his daughter attends university. Diplomats said the ousted prime minister could face prosecution if he returned home.

The British government said it had no reason not to allow Mr Thaksin into the country and has not to date received any request for his extradition. A spokeswoman declined to comment on whether the British government considered Mr Thaksin the legitimate prime minister. However, the European Union called for the military to “give way to the democratically elected political government”.

Gen Sonthi told foreign diplomats that there would not be a “witch hunt” against Mr Thaksin’s loyalists. But Chitchai Wannasathit, a deputy prime minister, and Thammarak Issrangkura Na Ayutthaya, the defence minister, both members of Mr Thaksin’s inner circle, are said to be in army custody as are several other of his key allies.

Mr Thaksin “caused an unprecedented rift in society, widespread corruption, nepotism and he interfered in independent agencies, crippling them,” Gen Sonthi said on television Wednesday.

Foreign investors indicated that Thailand would quickly get back to business.

“Thailand’s economy is fundamentally strong and financial market reactions have been limited,” said Rodrigo Rato, International Monetary Fund managing director.

FT.com
09-21-2006 04:06 PM
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