With rumors of a coup and continued protesting in the capitol The Thai government doesn’t seem to have a handle on the serious implications these factors have on the Thai economy and it’s rising inflation. Central banks across Asia were betting on a global slowdown to slow price increases. With U.S. and European export demands slowing down domestic consumption is rising steadily pushing inflation rates as high as 26% across Asia.

Bloomberg Reports show benchmark borrowing costs are lower than the rate of inflation resulting in negative real interest rates in Thailand, China, and the Philippines. Thailand has held it’s main rate at 3.25% for the past year while inflation has tripled to 6.2 %. There has been a strong boom in the Asian economy the past few years with all Asian currencies gaining on the dollar but investors have good reason to worry after the boom bust cycle of the 1980’s and early 90’s which led to a stampede of investors pulling money out of Asia plunging currency from Bangkok to Beijing. The longer Thailand and it’s neighbors delay anti-inflation action the greater the risk for another bust.

Whats bad for the Asian Economy has a small silver lining for those of us taking our foreign currency to the kingdom. The dollar has been gaining on the baht over the last week and now stands at 32.29 and rising to the dollar. Even though prices are increasing in Thailand you’ll still get more bang for your buck.

The Thai government is only feeding the fire with its political infighting which really boils down to the same problem it’s had for the past few years…Thaksin. Although he is no longer Prime Minister and his Party, Thai Rak Thai, was disbanded the majority party of the new government , Peoples Power Party, is the same Thai Rak Thai in sheeps clothing.

The current round of protests are due to the new Prime Minister SamakSundaravej’s meddling in the recent 2007 military drafted constitution trying to amend it with changes that would protect corrupt politicians and Keep former Prime Minister Thaksin from being prosecuted on charges of corruption.

Someone better start minding the store if they don’t want to re-live the economic crash of 1997.

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