Critics expect baht to plummet further
Fears were mounting last night of fresh trouble for Thailand's wounded baht with embattled premier Chavalit Yongchaiyudh holding crisis talks today on the currency with his troubled coalition partners.
Academics, analysts and opposition politicians warned the currency could reach 50 to the US dollar by the end of the year.
Transport and Communications Minister Suwat Liptapallop, who announced the emergency meeting, warned the rapid baht depreciation would make it harder to turn the economy around and would cause concern among the public and investors.
The baht stormed through the psychological threshold of 40 to the dollar late last week and was trading at 41.15 in Thailand by late Friday.
'At the moment there just seems to be nothing to stop it,' said opposition spokesman Abhisit Vejjajiva, whose Democrat Party has demanded the resignation of Premier Chavalit.
'No new announcements or policies are on the horizon and General Chavalit is still in office,' he said.
'We can only hope for a new round of action somehow.' Academics over the weekend warned of an unstoppable slide now the 40 threshold had been passed.
'When the baht broke through the 40-to-the-dollar barrier, it entered a freefall which Thailand by itself cannot stop,' said economist Somkiat Osotsapa in yesterday's Nation newspaper.
Foreign analysts said any 'residual goodwill' created by last week's cabinet reshuffle following the shock resignation of Finance Minister Thanong Bidaya had now ebbed.
'In the absence of any sudden good news, it could be a painful week for the baht indeed,' one analyst said.
'One saviour could be light trading volume because people are wary of touching it, other than those Thai companies needing dollars.' Many foreign analysts fear foreign companies are holding back on Thai deals ahead of an election which could take place as early as January. Others are warning of the nagging uncertainty over the rising private sector debts falling due over the next six weeks.
Friday's movement was sparked in part by corporations preparing for big foreign debt repayments before the end of the year, and further dollar purchases are expected this week.
Some economists believe the figure could top US$37 million unless some loans are rolled over.
Strict International Monetary Fund targets call for Thailand to have net foreign reserves of $4.7 billion by the end of the year.
The targets form part of a host of criteria laid down in the $17.2 billion bail-out brokered by the fund in August.
Many observers believe Thailand's economic situation will worsen before it improves, with bankruptcies and widespread lay-offs expected in several key sectors.