The Thai baht rose by 0.8% on Tuesday and was one of two Asian currencies, along with the South Korean won, to appreciate as the dollar fell, after the Federal Reserve signalled its rate-rising spree is coming to an end.
After trading below 35 to the dollar for several days, the baht enjoyed its biggest intra-day jump in a week and was quoted at about 34.80 in offshore markets.
The big news on Tuesday was former Thai army chief and prime minister, Prayuth Chan-ocha, announcing his retirement from politics, nine years after he took power in a military coup.
His announcement was widely expected after his military-backed United Thai Nation party was thumped in the May 14 election, in which it won just 36 of the 500 house seats.
All eyes on vote for new PM on Thursday
Prayuth promised to stay on as caretaker premier until a new government is formed, and the structure of a new ruling coalition could well be decided in coming days.
Players in the Thai stock and forex markets are anxiously awaiting the vote on Thursday to select the next prime minister.
It is unclear whether Move Forward Party leader Pita Limjaroenrat has enough support in the Senate to get the 376 votes he needs to become the country’s new leader.
The young Move Forward leader appealed on Tuesday, via a video on his Facebook page, for MPs and senators to allow a democratic majority government “that accords with the people’s will” when they vote on Thursday.
Recent comments from senators appointed by the former conservative regime have cast doubt on Pita’s chances, because of his party’s declaration that it wants to reform the lese majeste (royal defamation) law.
A vote against Pita would not surprise, but it could hit both the baht and the stock exchange, because of the possibility of unrest by the millions of young voters who supported his party.
Many pundits have said Pheu Thai Party may end up heading the coalition which eventually takes power, despite Move Forward having the most seats in the new parliament – with 150 compared to Pheu Thai’s 141.
‘I tried to strengthen the country’: Prayuth
Prayuth, a staunch royalist who led a junta regime until an election in 2019, when he was chosen by parliament to remain as prime minister for four more years. It was an outcome some of his opponents insist was pre-determined.
The former general, now 69, has denied that and said on Tuesday he had “achieved many successes”.
“I as prime minister have worked hard to protect the nation, religion, monarchy for the benefit of the beloved people. The result is currently bearing fruit for the public,” he said in a statement.
“I have tried to strengthen the country in all areas for stability and peace and overcame many obstacles domestically and internationally.”
In the nine years since his coup, Prayuth has survived multiple challenges via court cases, house confidence votes and street protests by opponents who saw him as an opportunist who lacked a public mandate.
His announcement is likely to be welcomed by many quarters, but the shape of Thailand’s new government is uncertain because of doubt on how senators will vote in the bicameral poll on a new leader.
Some 194 of the 250 senators were selected by the ruling junta, while 50 represent 10 professional and social groups, such as bureaucrats, teachers, judges, farmers and private companies.
It could be a volatile week for the baht and the Stock Exchange of Thailand. If Pita is elected PM, both the baht and SET might get a significant lift.
- Jim Pollard with Reuters
NOTE: Minor edits to headline and text on July 11, 2023.