International ratings agencies Standard & Poor's and Moody's Investors Service both issued statements warning of the undermining effect of rising political tension on Thailand's investment-grade credit ratings.

The Thai baht fell to 34.47 against the U.S. dollar in morning trade, from 34.32 on Monday. The Bank of Thailand said it had intervened in the foreign-exchange market to prevent further weakening of the currency after the government declared state of emergency in the capital.

Apichart Sangaree, president of the Association of Thai Travel Agents (ATTA) said the current situation had impacts on travel agents as September was the high season of Australian and Asian travelers.

If the turmoil does not end soon, the tourism industry would suffer further, as from October onwards is the 'high season' period during which usually about a million European tourists would travel to the kingdom, said Apichart.

The local stock market dropped 15.71 points or 2.3 percent to end at 659.51 points on Tuesday.

ASEAN Secretary-General Surin Pitsuwan, former Thai foreign minister, also expressed concern that the ongoing political turmoil in Thailand could impact the kingdom's image as new ASEAN chairman, months ahead of a Bangkok-hosted ASEAN summit in December.

On Tuesday, traffic around the Government House was closed off but commutation in other parts of the capital remained much in normalcy. All 436 schools in Bangkok will be closed for three days effective, though.

This is the first-time enforcement of the Emergency Decree in accordance with the new 2007 Constitution since pushed through last year by the junta which governed the country after the Sept. 19, 2006 bloodless military coup that ousted then elected premier Thaksin Shinawatra.

The last similar case was when the country's military top brass led by then army chief Gen Sonthi Boonyaratkalin staged the 2006 coup, the junta immediately imposed martial law throughout the nation.

(Xinhua News Agency September 3, 2008)