The One Asian Currency NOT to Buy!

Dear Reader,

Hi there again folks!

You have known me for a while and you have read through several of my writings on Asia and Asian currencies.

You know that I am a great bull when it comes to Asia. I am very bullish on the growth story emerging from Asia and all that it brings with it. And when I talk about Asia, I am not talking just about China and India. I consider Asia, Ex Japan. And I have chronicled growth stories in Singapore, Vietnam, Korea, Indonesia, Malaysia, Taiwan and many other such countries.

Today I want to lament on one of my favorite currencies that has crashed and burnt, literally. I am talking about Thailand and the Thai Baht.

The past few weeks had seen tremendous amount of political upheaval when we had the populous “Red Shirt” movement which has been protesting against the current state of governance, and wants the current Prime Minister to resign. While they have not made a direct demand for the return of fugitive ex-premier Thaksin Shinawtra, it seems that he is driving the frenzy via internet based fiery speeches.

The latest round of violence is beginning to spiral out of control. There are daily deep protests on the streets of Bangkok. The “red shirts” brigade has ratcheted up its protests since one of their prominent leaders, the rogue Major General Khittiya Sawasdipol was the target of an assassination attempt. The mob has gotten into frenzy and the activist movement has gathered steam.

The security forces have been forced to increase their response to the increased activity. There have been more firings into the crowds with 8 deaths in the past couple of days.

The opposition to the current government has become very opportunistic with the revered King Bhumibol being really sick and unable to make any statements and calm the crowds. And this is the main cause of concern. Thailand has seen unrest before, but the King has always come in and calmed the two warring parties. This time, we have seen no such moves from the King and may not see it this time around.

Thailand’s economy is heavily dependent on Tourism. And the recent reports show that hotels in Bangkok are running at 30% occupancy when at this time of year it should be about 80-90%. And this is a truly worrisome trend.

Productivity in agriculture is down and that will affect the other large part of the GDP growth in the country.

So unless there is immediate calm in the streets of Bangkok, the Bank of Thailand will have no choice but to lower the GDP growth forecasts.

At this stage, I will have to stay away from the Thai Baht, one of my favorite currencies in Asia.

Stay Informed in FX Profits,

Ashish Advani

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