Coup does little to slow baht rally

The coup in Thailand on Sept. 19 that ousted Prime Minister Thaksin Shinawatra temporarily halted a strong run for the nation’s currency.

The morning of the coup the Thai baht had been trading at all-time highs vs. the U.S. dollar, reaching a price of 37.03. The currency climbed to 37.89 that afternoon before closing at 37.74. The next day, it closed at 37.77 — its highest close since Aug. 4.

However, the baht traded as low as 37.05 on Sept. 21 and closed at 37.34. It has moved up slightly since then, closing at 37.51 on Sept. 28. But since the coup (which had been rumored for some time) came with minimal conflict and appears to have been a success, some analysts think the governmental change could be good for the economy.

General Sondhi Boonyaratklin seized control of the government, revoked the constitution, and promised to appoint a civilian government within two weeks of the coup. He also pledged a new version of the Thai constitution, and a restoration of democracy within a year.

Fitch Ratings, an international firm specializing in providing credit ratings for countries, said the coup could lead to a downgrade of Thailand’s credit. However, the firm also said that considering the growing unhappiness with Shinawatra led to concerns about the Thai economy, the change in leadership could actually bring about some economic stability.

King Bhumibol Adulyadej, who has ruled in Thailand for 60 years, reportedly knew of the coup attempt and was in favor of it. That has helped ensure the transition was mostly peaceful.

While analysts say some short-term downward movement in the baht is not unlikely, they don’t expect a long-term negative effect. However, most agree that if any uncertainty or turmoil emerges latently from the coup, all bets are off.