The series of explosions across the Thai capital on Sunday killed three people and wounded 38 and provoked a security crackdown, with police and soldiers setting up 6,000 checkpoints across the city.
Surayud Chulanont, the Thai prime minister installed after the Septeber 19 coup, said the government did not know who was responsible.
"We could not at this stage pinpoint which particular group was involved," he said.
But he ruled out any foreign responsibility for the attacks and said intelligence pointed to supporters of politicians who had lost power in last year's coup, rather than elements fighting in the south of the country.
Surayud declined to say what evidence pointed to former politicians.
Chalee Keuyen, an analyst at Trinity Securities, said: "Whether it's about the south or internal politics, the aim [of the bombings] is clear and has been successfully achieved - to discredit the current government and the National Security Council."
"The market probably won't fall as much as Black Tuesday ... but it's no doubt the market will surely fall as an initial reaction to the incident."
analyst with Bualuang Securities
Lawyers of Thaksin Shinawatra, the elected prime minister deposed in the coup, called the implications from the military government a "smear campaign".
Leading members of Thaksin's Thai Rak Thai party have also denied involvement in the attacks.
The Thai economy has already struggled with political turmoil for most of last year as well as a poorly devised attempts to control the baht.
A mass movement to oust Thaksin for alleged corruption and abuse of power nearly paralysed the country's administration for much of 2005 and since the coup Thaksin's administration has been scrutinized over corruption charges.
But since the military government seized power in September, several schools outside Bangkok have been torched and martial law put in place in several areas because of what the army calls "undercurrents".
Analysts were already expecting foreign outflows following a surprise move in December the Bank of Thailand, which imposed a 30 per cent withholding deposit on selected capital inflows as a means to slow the rise of the baht.
An increasingly strong baht, strengthening against other regional currencies, had put pressure on Thai exporters.
Foreigners were heavy sellers on the Thai stock market during December, but many investors were waiting until the New Year in the hope of further gains in 2007.
The withholding measure had also raised the cost of money leaving and re-entering the country.
|Black Tuesday saw a 15 per cent drop in the |
Thai bourse's SET Index [EPA]
The bombings are expected to mean outflows will be even higher than previously expected, however analysts have said the panic selling expected when the markets reopen will probably not be as severe as Black Tuesday on December 19, when the central bank initially imposed its withholding measure.
A 15 per cent drop in the local bourse's SET Index was the Thai market's biggest ever one-day fall. The measure was amended the next day so as not to restrict equity investment.
Pongrat Ratanatawanananda, an analyst at Bualuang Securities, said: "The market probably won't fall as much as Black Tuesday, as this time around investors have two full days to digest information and deliberate their next moves. But it's no doubt the market will surely fall as an initial reaction to the incident."
Another analyst said he expected to see the baht weaken by at least 0.50-1 baht to the US dollar.
He said the dollar could rise to 37 or 38 baht in the coming weeks, depending on the extent of the panic among foreign investors.
The baht traded on Friday at 36.11 to the dollar in Thai markets, and 35.30 offshore.
Ironically, that is around the level that analysts estimate the central bank would like to see - as it would bring the baht back in line with the movements of other regional currencies against the dollar.