An exchange traded fund that invests in Thailand pulled back Wednesday following its rally after incoming prime minister Yingluck Shinawatra’s Pheu Thai party won the recent general election.
She is the sister of exiled former prime minister Thaksin Sinawatra, and emerged the victor on a platform promising internal improvements and a receptive attitude on foreign investment.
The Pheu Thai party pledges to raise incomes for low-income workers and boost domestic demand to wean the country off foreign exports, according to a recent Bloomberg report. The economic chief, Suchart Thadathamrongvej, also believes that the party will help keep the country’s currency “competitive.”
The Thai baht currency has appreciated around 4.7% against the dollar over the last year, but it has dropped 3.1% year to date. As the currency drops, exports become cheaper to overseas buyers — export sales make up around two-thirds of Thailand’s economy. Export growth has dropped to 17.6% in May. The central bank, though, raised its 2011 export growth projections to 20.4% from 11% to 14% on increased advance orders.