Thailand’s baht held gains, trimming a selloff this week, after the Royal Household Bureau said King Bhumibol Adulyadej, the world’s longest reigning monarch, had died at the age of 88.
The currency strengthened 0.2% to 35.608 per dollar as of 7:30pm in Bangkok, compared with its level at 5pm on Wednesday in New York, paring losses since the royal palace said on Sunday the monarch’s health was “unstable” to about 2%. After dropping more than 9% in the first three days of the week, a US-listed exchange-traded fund tracking Thai stocks climbed in early New York trading.
“There’s quite a lot of bad news built into the price already,” said Jeffrey Halley, a market strategist at Oanda Asia Pacific Pte in Singapore, who anticipates the currency will face some pressure into today. “The Bank of Thailand will be around to smooth out any market movements, possibly with the assistance of other central banks.”
Thai assets have come under selling pressure this month, with stocks suffering the worst rout worldwide and bond yields rising the most in Asia, as concern mounted about the health of a monarch who has been a symbol of unity in Thailand, which experienced 10 coups during his seven-decade reign.
The benchmark SET Index of shares in Bangkok reversed a decline of as much as 3.5% yesterday, to close 0.5% higher at 1,412.82. Trading had ended for the day before the announcement of the king’s death. The price of the iShares MSCI Thailand Capped ETF was $66.94 in pre-market trading by 8:53 am in New York, representing an increase from the close on Wednesday at $66.73.
“The key will be to see a smooth transition of power to the new king,” said Tony Hann, the head of equities at Blackfriars Asset Management in London, who holds a greater share of Thai stocks in his portfolio than in the MSCI Emerging Markets Index. “If that occurs then I think the recent setbacks provide a good entry.”