(Bloomberg) — Thailand’s finance minister resigned less than a month after he took office, injecting more uncertainty into an economy already reeling from its worst crisis in decades. The nation’s currency tumbled the most since July.
The resignation of Predee Daochai, a former co-president of Kasikornbank Pcl, will be effective from Wednesday, according to a Royal Gazette announcement Tuesday. Predee, 61, was named as the new finance minister on Aug. 6 and joined Prime Minister Prayuth Chan-Ocha’s Cabinet on Aug. 12.
Predee resigned because of ill health, Prayuth said, adding the minister’s resignation won’t derail government policies. A new finance minister will be appointed at the “appropriate time,” he told reporters in Bangkok Wednesday.
Prayuth may approach outgoing Bank of Thailand Governor Veerathai Santiprabhob and former president of PTT Pcl Pailin Chuchottaworn to replace Predee, Thai-language newspaper Krungthep Turakij reported earlier, citing a source from the government house. A spokesman for the central bank said he wasn’t aware of Veerathai being approached for the job.
The baht tumbled as much as 0.8% 31.301 to a U.S. dollar on Wednesday, the most since July 16. The benchmark SET index of stocks traded 0.3% higher by 11:08 a.m. local time, rebounding from a 0.4% decline Tuesday.
The economy is on track for its worst contraction on record, with the Finance Ministry predicting an 8.5% decline this year as the nation’s key growth drivers of tourism and trade slump. Prayuth made several changes to his economic team last month to help shape the government’s response to the economic crisis. But Predee’s resignation will now hurt investor confidence, according to Amornthep Chawla, head of research at CIMB Thai Bank Pcl in Bangkok.
“The urgent task for the government now is to restore confidence. They need to find a qualified replacement who has good background and is accepted by the market,” Amornthep said. “Investors are still waiting to see the continuation of the existing economic policies drafted by the last economic team and they haven’t got the answer yet.”
The central bank is also facing a shake-up. Sethaput Suthiwart-Narueput will take office as governor to replace Veerathai when he leaves at the end of his term this month. While the government has announced stimulus worth $60 billion and the central bank lowered interest rates to a record low, it may take the economy at least two years before returning to the pre-pandemic level, according to the Bank of Thailand.
“There is an urgency now for having a well-functioning economics team because many of the ad-hoc programs crafted back in April to cushion the downside from Covid-19 measures are finishing soon,” said Maria Lapiz, head of research at Maybank Kim Eng Securities (Thailand).
(Updates with prime minister’s comments in third paragraph.)
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