Thai stocks suffered
their biggest drop since
Asia's 1997 financial
crisis after foreign
investors took fright at
drastic measures to rein
in the baht, prompting
calls for a central bank
u-turn.
The currency dropped
2% from Monday's
nine-and-a-half-year
high after the central
bank, worried that
strength in the baht
would hurt exporters,
slapped controls on
short-term speculative
money inflows.
The main stock index
plunged more than 13% to
a two-year low at one
point, wiping more than
$20 billion off the
value of southeast
Asia's third-largest
market. Reaction in the
bond markets was equally
ruthless as foreign
investors rushed for the
exit, forcing prices
sharply lower.
After the stock index
ended the morning 11.76%
lower, exchange
president Patareeya
Benjapolchai begged the
Bank of Thailand to
review its policies. But
the central bank
retorted it was too soon
for any review of a
measure analysts
described as
'draconian'.
The baht, the
fastest-rising Asian
currency against the
dollar this year, was
trading around 35.70 per
dollar, down 1.8% from
35.06 early on Monday
before the central bank
announced its latest
steps to halt currency
speculation. It dropped
as low as 35.97 per
dollar after the central
bank announced the baht
restrictions.
Under the measures,
investors will have to
keep their money in
Thailand for at least a
year or face stiff
financial penalties. The
new regulation affects
all sums over $20,000
not linked to trade or
foreign direct
investment.