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| Thais ease measures on currency | |
| (20 minutes later) | |
| Thailand is to ease controls on foreign investment in the stock market after shares suffered their worst daily fall in 16 years and closed down 14.8%. | |
| Moves had been announced to deter overseas speculators from flooding the market and prevent further rises in the value of the baht. | Moves had been announced to deter overseas speculators from flooding the market and prevent further rises in the value of the baht. |
| The rising currency had threatened the country's export industries. | The rising currency had threatened the country's export industries. |
| But as foreign investors sold stock the finance minister said equity investment would not be included in the new move. | But as foreign investors sold stock the finance minister said equity investment would not be included in the new move. |
| If you get a major stock market sell-off in one day based on a policy measure, I think the market will question the [bank] leadership ABN Amro | If you get a major stock market sell-off in one day based on a policy measure, I think the market will question the [bank] leadership ABN Amro |
| The Bank of Thailand had said late on Monday that 30% of non-trade related foreign exchange sold for the local baht currency must be deposited interest free with the central bank for a year. | The Bank of Thailand had said late on Monday that 30% of non-trade related foreign exchange sold for the local baht currency must be deposited interest free with the central bank for a year. |
| The measures also included a rule that required all new foreign investments over $20,000 to stay in the country for at least a year. | The measures also included a rule that required all new foreign investments over $20,000 to stay in the country for at least a year. |
| However, after the stock market slide Finance Minister Pridiyathorn Devakula said on television that from Wednesday foreigners would be able to trade equities free of the restrictions on short-term fund inflows. | However, after the stock market slide Finance Minister Pridiyathorn Devakula said on television that from Wednesday foreigners would be able to trade equities free of the restrictions on short-term fund inflows. |
| The restrictions still apply to overseas investments in bonds. | The restrictions still apply to overseas investments in bonds. |
| Money flowing in | Money flowing in |
| The SET stock market index ended trading at 622.14 points - after its biggest one-day fall since Saddam Hussein invaded Kuwait in August 1990 - with the banking, energy and telecommunications sectors all hit. | The SET stock market index ended trading at 622.14 points - after its biggest one-day fall since Saddam Hussein invaded Kuwait in August 1990 - with the banking, energy and telecommunications sectors all hit. |
| The reverberation throughout the region was the most dramatic since the 1997 Asian financial crisis. | The reverberation throughout the region was the most dramatic since the 1997 Asian financial crisis. |
| In 1997, dramatic outflows of foreign funds - initially in Thailand - led to the Asian financial meltdown. | In 1997, dramatic outflows of foreign funds - initially in Thailand - led to the Asian financial meltdown. |
| Monday's move by the central bank was its third recent attempt to stop currency speculation. | Monday's move by the central bank was its third recent attempt to stop currency speculation. |
| The authorities have felt vulnerable at so much overseas money circulating in the economy as investors have looked to speculate on the markets or baht. | The authorities have felt vulnerable at so much overseas money circulating in the economy as investors have looked to speculate on the markets or baht. |
| Central bank figures showed that up to $950m of foreign capital came into Thailand in the first week of December, up from an average of $300m a week in November. | Central bank figures showed that up to $950m of foreign capital came into Thailand in the first week of December, up from an average of $300m a week in November. |
| Analysts were left wondering why the bank would make such a "draconian" move. | Analysts were left wondering why the bank would make such a "draconian" move. |
| "Frankly, if you get a major stock market sell-off in one day based on a policy measure, I think the market will question the leadership. It's as simple as that," Shahab Jalinoos, a strategist at ABN Amro Bank in Singapore, said. | "Frankly, if you get a major stock market sell-off in one day based on a policy measure, I think the market will question the leadership. It's as simple as that," Shahab Jalinoos, a strategist at ABN Amro Bank in Singapore, said. |
| The baht had hit a nine-year high of 35.09 against the US dollar on Monday. | The baht had hit a nine-year high of 35.09 against the US dollar on Monday. |
| The baht, and Thai economy, had been under pressure following September's military coup in the country, but the authorities had moved to reassure markets and investors. | The baht, and Thai economy, had been under pressure following September's military coup in the country, but the authorities had moved to reassure markets and investors. |