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December 18th 2006

Thailand moves to stem Baht appreciation

In the year-to-date, the Thai Baht has appreciated by almost 20% against the USD, making it one the world’s strongest performing currencies. This becomes especially impressive when you consider that it has taken place against the backdrop of a military coup. Today, the Central Bank of Thailand effectively put an end to the Baht appreciation by effecting immediate controls on foreign capital inflows. The Central Bank has come to the (correct) conclusion that the run-up of the Baht has been a result of a surplus of speculative capital rather than a sudden increase in demand for Thai goods and services. Accordingly, foreigners who wish to make bets in Thai capital markets will henceforth be required to keep their money in Thailand for at least one year before they can withdraw it. The Financial Times reports:

The baht weakened further on Tuesday, trading at Baht35.67 to the dollar by early afternoon, 1 per cent down from the nine-year high point of Baht35.06 reached earlier Monday before the central bank’s announcement.

Read More: Thai stocks plunge on capital controls

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Posted by Adam Kritzer | in Central Banks, Exotic Currencies | 1 Comment »

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One Review of “Thailand moves to stem Baht appreciation”

  1. matt boontham Says:

    Investors and currency speculators learned nothing about Thailand in 1996’s meltdown, apparently. With bombs going off regularly in the capitol now, as well as the latest news linking the violent “Red Shirt” movement to violent Muslim factions in the south, Thailand is about as stable as a beaker of nitroglycerin in the hands of a palsy victim on crack. Yet people are loading up on Thai Baht! When it crashes again, just as it did a decade and a half ago, these same speculators will be caught with their pants down once again. Amazing how many learn nothing from history, or experience!

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