Thailand’s central bank left the one day repo rate unchanged at 3.75% at today’s Governors meeting. The decline of inflation numbers in recent months had left conjecture that rates might be eased to help stimulate growth in light of the current global credit meltdown, but Bank of Thailand Governor Tarisa Watanagase –a career bureaucrat who was with the bank during the late 90’s currency crises, has focused on defending the Baht and the domestic risks brought by civil unrest.
Calm heads prevail inside the central bank, but in the streets of Bangkok anarchy reigns. Yesterday 400 protesters were injured (including 2 that required limb amputations) and 2 killed in clashes with military security forces as they attempted to halt the inauguration of the new government of Prime Minister Somchai Wongsawat -regarded as a puppet of ousted leader Thaksin Shinawatra by many (Somchai is the brother in law of Thaksin). An explosion near the capitol building is believed to have been a car bomb.
In the face of a global market meltdown and spiraling violence in the streets, equity investors ran for the exits taking the SET Index to its lowest level in five years.