Photo: Sweden Herald
Thailand’s stock market fell sharply on Wednesday after the country’s Constitutional Court suspended Prime Minister Paetongtarn Shinawatra over a politically sensitive phone call with former Cambodian Prime Minister Hun Sen. The benchmark SET Index dropped 0.41%, reflecting growing investor unease over potential instability in Thailand's leadership.
The court’s decision, seen as a significant political blow to the ruling Pheu Thai Party, has introduced fresh uncertainty into a country already wrestling with sluggish economic growth, rising inflation, and a simmering border dispute with Cambodia.
The court order stems from a leaked audio recording in which Prime Minister Paetongtarn allegedly discussed diplomatic matters with Hun Sen in a manner that critics claim may have compromised national interests. The leak, which surfaced on local media and quickly spread across social platforms, has become a flashpoint in Thailand's already tense political environment.
Though the court has not ruled on Paetongtarn's guilt, it said the allegations were serious enough to warrant immediate suspension while it considers whether the conversation constituted a breach of constitutional duties.
Thailand’s economy is already navigating stagnant GDP growth, high household debt, and falling foreign investment, all of which have weighed on business sentiment. The timing of the political crisis has further eroded investor confidence.
The Thai baht traded flat at 32.42 against the U.S. dollar, showing muted reaction in forex markets. However, financial analysts noted that continued political instability could trigger capital outflows, especially if the government enters a prolonged power vacuum.
The diplomatic implications of the leaked call are also under scrutiny, as relations between Thailand and Cambodia have been under strain over a longstanding border and resource dispute. Observers fear the controversy could derail ongoing negotiations between the two Southeast Asian neighbors.
Investors are now waiting to see whether the Pheu Thai Party can nominate a stable interim leadership, or if this will lead to broader challenges within the ruling coalition. Some analysts warn that foreign investment decisions could be postponed, especially in sectors like tourism, manufacturing, and infrastructure.
With no timeline yet from the court on a final decision regarding the prime minister's status, markets may continue to face elevated volatility. In the near term, the Bank of Thailand is expected to monitor capital flows and may intervene if currency pressures escalate.
Global investors will also be watching for any credit rating agency responses, which could further impact Thailand’s borrowing costs and foreign investment climate.
The suspension of Prime Minister Paetongtarn comes at a critical juncture for Thailand's political and economic future. As the country grapples with internal and external challenges, stability in governance will be key to restoring investor confidence. Without swift resolution, the risk of a prolonged political standoff could deepen financial market stress and hamper recovery prospects for Southeast Asia’s second-largest economy.