Thai Currency Under Attack Again After 1997 Crisis?

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Dec 18 2006
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Thai Baht seems to be under attack again by currency speculators since the 1997 Asia Economic Crisis which started from the same place, same method and same culprit. But this time the problem is the rises of Baht.

The Bank of Thailand announced fresh measures on Monday, 18-Dec-2006, to try to curb the baht’s rise by forcing speculators to keep their money in the country for at least one year or face stiff financial penalties. From Tuesday, 19-Dec-2006, 30 percent of non-trade related foreign exchange sold for baht must be deposited interest-free with the central bank for a year.

The new rules, the central bank’s third attempt since early November to block speculation in the baht, affect transactions worth more than $20,000. “Should any customers wish to repatriate their funds earlier than one year, they would be refunded only two-thirds of the amount,” Bank of Thailand Governor Tarisa Watanagase said in a statement.

Tarisa said the new restrictions, described by one analyst as “draconian”, were necessary because previous measures had failed to slow the appreciation of the baht, Asia’s best-performing currency so far this year which had surged more than 16 percent this year.

Will this new measure benefit Malaysia with foreign investors switch over to Bursa Stock Exchange (KLSE)? Will Thailand adopt Malaysia’s method of fixing its’ currency if things get worst?

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