The Stock Exchange of Thailand index slipped from its intraday high of 732.60 points in the morning session to close at 728.99, up 5.13 points from Wednesday's close.

The baht fell to 39.26 against the US dollar following the blast as both onshore and offshore traders scrambled to buy dollars.

It recovered, however, to close the day at 39.10 to the greenback, up from 39.19 at the Asian close on Wednesday.

Bank of Thailand Governor MR Pridiyathorn Devakula said the economic growth forecast of 4.75-5.75 per cent remained intact, but added that prolonged political tension could affect investment in the long term.

Currently, some sectors were declining while others were rising, he said.

Although private investment had fallen it remained at a satisfactory level, he said.

"I'm not sure about the impact of the bomb, but whatever happens to the economy, I'm sure I'll be able to handle any problems," he said.

He has foreign reserves of US$54 billion (Bt2.11 trillion) to deal with any problem.

As two foreigners were injured in the blast, hotel and tourism business operators anticipated some booking cancellations, especially if the situation worsens.

Most hotels in Bangkok, which still maintain on average an 80-per-cent occupancy rate, have increased security.

Businessmen anticipate the blast will worsen investment sentiment, but say the actual impact on the economy will depend on how long the political uncertainty lasts.

"I really want this conflict to come to an end quickly," said Subhak Siwaraksa, chief executive officer at TMB Bank.

Thawatchai Yongkittikul, secretary-general of the Thai Bankers Association, said some foreign investment had been delayed and if the conflict dragged on domestic investment could follow suit.

Business Desk

The Nation