Pridiyathorn Resigns As Deputy Pm, Finance Minister

[ThaiGoon]

From Bangkok post:

Foreign capital controls 'to end today'

(Agencies)

Thailand will lift its remaining controls on capital inflows today, after the finance minister who was their chief supporter announced his resignation.

http://www.bangkokpost.com/breaking_news/b...s.php?id=117133

That's pretty quick....

[steveromagnino]

I am no economist, The end!

You are right you are no economist you just love yourself. We all should feel sorry for wife or GF or BF

Dear Henry, while I was enjoying my breakfast of leisure, while a bevy of beautiful women fanned me with their oversized breasts and massaged my scalp with their shaved nether regions, i felt an odd compulsion to check the internet.

Asking my chorus of ladies to stop saying 'Khun Steve bpen kon piset mahk gua 30 b' I stumbled across your remarkably clever and inciteful reply.

Wow. You are the Scorcese of TV. You are the mince AND cheese. You are the steak with all the fixins. You could be the next messiah, bringing a message of hope and the choice of a new generation.

Thank you for your detailed input, and kind suggestions, I shall be sure to convey your message of pity to my wife slash GF slash BF, once I remove my Jack Dawsonyao from your own partner's Jean Claude (van Damm).

Once again, thank you for adding so much to the message board.

[ThaiGoon]

:D "Jack Dawyao"!!!!

[Bobcat]

http://breakingnews.nationchannel.com/read...5832〈=T

The 30% reserve requirement is being relaxed for certain investments which are fully hedged. There is no mention of the requirements being scrapped altogether.

[steveromagnino]

:D "Jack Dawyao"!!!!

Pleased you enjoy. I think the joke goes, why was Rose sad? Because Jack Dawson.

Classic stuff. I'll be performing the rest of the week. :-)

I wondered if you would be the first to 'get it' ThaiGoon. I was right. God I love myself so much, a quote I feel that Woody Allen probably was saying with regards to my goodself:

'His lack of education is more than compensated for by his keenly developed moral bankruptcy.'

Woody Allen

[ThaiGoon]

:D "Jack Dawyao"!!!!

Pleased you enjoy. I think the joke goes, why was Rose sad? Because Jack Dawson.

Classic stuff. I'll be performing the rest of the week. :-)

I wondered if you would be the first to 'get it' ThaiGoon. I was right. God I love myself so much, a quote I feel that Woody Allen probably was saying with regards to my goodself:

'His lack of education is more than compensated for by his keenly developed moral bankruptcy.'

Woody Allen

Steve, I'm Thai. So I pretty much got it right away.

[SmokeandIce]

hold what down Sam thai baht to 35.06 to usd when in my opinion it should be around 45 to 1 usd after all we had a coup tsunami market drop bomb in bkk and other areas ploblems in south getting worse tourism down did I miss any thing here I am getting pissed every time I go to bkk bank and see my USD get less baht than I should be getting but like a fool I will hang in there for another year lets see now i am losing around 250 bucks a month X 12 = 3000 usd pocket change to some but it a lot of money to me as far as I am concerned I want to see the thai baht crash & burn so I can get 100 to 1 that would please me very much since the only thing I have to pay for is truck payment of 12 k every month as for those falongs with house mortgage it would help them also my two cents is used up bye for now Ronnie

Near the bottom row of your keyboard, you will find some of these: "," and "." Also, the keys labelled "Shift" - one on the left and one on the right - are for making letters like this: "t", turn into letters like this: "T".

I think your problem of the Baht/Dollar exchange rate is with the US Dollar...take a look at the US $/Euro/British pound and you will see that your precious dollar is sinking...Thailand may have had a tsunami and problems in the South; however, the US has had Katrina and has Iraq/Afghanistan and Bush...me thinks the dollar will continue to make you unhappy..good luck with the truck payment...maybe you should downsize to a motorcyle.

Edited March 1, 2007 by SmokeandIce

[younghusband]

:D "Jack Dawyao"!!!!

Pleased you enjoy. I think the joke goes, why was Rose sad? Because Jack Dawson.

Classic stuff. I'll be performing the rest of the week. :-)

I wondered if you would be the first to 'get it' ThaiGoon. I was right. God I love myself so much, a quote I feel that Woody Allen probably was saying with regards to my goodself:

'His lack of education is more than compensated for by his keenly developed moral bankruptcy.'

Woody Allen

Steve, I'm Thai. So I pretty much got it right away.

re the Jack Dawson crack, I would have that was a bit too close to home for most Thai guys to find funny (or so I have heard, not from any personal knowledge you understand).

[steveromagnino]

re the Jack Dawson crack, I would have that was a bit too close to home for most Thai guys to find funny (or so I have heard, not from any personal knowledge you understand).

asssuming i am understanding what you are trying to say (presumably you are not english as a first language), I think you mean 'I would 'ave thought that was a bit close to home...' I doubt it. This is a typical joke told by Thai pepun. Out of date these days, but still verry verry funny.

As for me, I know I gots da goods, da whole package for my little pu$$y wrap, I gots gold, crazy gold, gumby gold. BAAAAAAAAAAAAAAAAAAAAAAM! Dem hos been lovin' dat. BAAAAAAAM I can hang!

We can guess you spend your time hanging around boy bars checking out Thai men and their size (or lack thereof) young husband, not that there is anything wrong with that :-) Check out that forum a bit lower down, there are some posters who share your common interest in this subject matter

All for laughs aye, good fun :-)

[younghusband]

re the Jack Dawson crack, I would have that was a bit too close to home for most Thai guys to find funny (or so I have heard, not from any personal knowledge you understand).

asssuming i am understanding what you are trying to say (presumably you are not english as a first language), I think you mean 'I would 'ave thought that was a bit close to home...' I doubt it. This is a typical joke told by Thai pepun. Out of date these days, but still verry verry funny.

As for me, I know I gots da goods, da whole package for my little pu$$y wrap, I gots gold, crazy gold, gumby gold. BAAAAAAAAAAAAAAAAAAAAAAM! Dem hos been lovin' dat. BAAAAAAAM I can hang!

We can guess you spend your time hanging around boy bars checking out Thai men and their size (or lack thereof) young husband, not that there is anything wrong with that :-) Check out that forum a bit lower down, there are some posters who share your common interest in this subject matter

All for laughs aye, good fun :-)

You got me squire and so chalart also for spotting English not my father tongue.Maybe see you down Silom Soi 4 one night, big boy.

[Old Man River]

The PM has said that he would reshuffle the cabinet next week. With inflation down as low as it has been for almost 3 years, it gives the BOT a lot of room to lower interest rates should they so wish. That may well end up being the case if Virabongsa is appointed as new FM as he has favored interest rate cuts over capital controls to weaken the THB. How quickly interest rates are lowered and capital controls released will be between Virabongsa and Tarisa at that time, but we can expect that this will be the policy going forward.

[steveromagnino]

You got me squire and so chalart also for spotting English not my father tongue.Maybe see you down Silom Soi 4 one night, big boy.

Soi 2 is where the real big boys hang out, big boy. See you there hot cheeks. :-)

Young Husband. Putting the hussy, in Husband rrrrrreeeeeeeeaw. (that sound gay people do which sounds like a cat, like in Family Guy).

[John K]

http://breakingnews.nationchannel.com/read...5832〈=T

The 30% reserve requirement is being relaxed for certain investments which are fully hedged. There is no mention of the requirements being scrapped altogether.

The 30% thing was a disaster from the go, I also think this resignation was more about face than anything else. Bloomberg says they recognized their mistake and to even make mention there was a mistake is significant loss of face. I suspect more adjustments back to zero will be made. At this point I don’t think Thailand can afford the old school thinking any longer.

[Old Man River]

http://breakingnews.nationchannel.com/read...5832〈=T

The 30% reserve requirement is being relaxed for certain investments which are fully hedged. There is no mention of the requirements being scrapped altogether.

The 30% thing was a disaster from the go, I also think this resignation was more about face than anything else. Bloomberg says they recognized their mistake and to even make mention there was a mistake is significant loss of face. I suspect more adjustments back to zero will be made. At this point I don’t think Thailand can afford the old school thinking any longer.

So what is the new school thinking? Say, controls are eliminated and speculators again attack the THB resulting in another rapidly appreciating THB/USD exchange rate. What is the "new" school of thinking on this? Note, Virabongsa was against the capital controls, favoring cutting THB interest rates to weaken the THB, hardly new school either.

[John K]

http://breakingnews.nationchannel.com/read...5832〈=T

The 30% reserve requirement is being relaxed for certain investments which are fully hedged. There is no mention of the requirements being scrapped altogether.

The 30% thing was a disaster from the go, I also think this resignation was more about face than anything else. Bloomberg says they recognized their mistake and to even make mention there was a mistake is significant loss of face. I suspect more adjustments back to zero will be made. At this point I don’t think Thailand can afford the old school thinking any longer.

So what is the new school thinking? Say, controls are eliminated and speculators again attack the THB resulting in another rapidly appreciating THB/USD exchange rate. What is the "new" school of thinking on this? Note, Virabongsa was against the capital controls, favoring cutting THB interest rates to weaken the THB, hardly new school either.

Old school = big fish little pond

new school = little fish big pond

The need to make Thailand attractive to people other than tourists, and not let the thinking of we are the only game in town pop into their head, because simply they are not the only game in town anymore.

Changing interest rates and other things this is reactive and not proactive.

[Old Man River]

http://breakingnews.nationchannel.com/read...5832〈=T

The 30% reserve requirement is being relaxed for certain investments which are fully hedged. There is no mention of the requirements being scrapped altogether.

The 30% thing was a disaster from the go, I also think this resignation was more about face than anything else. Bloomberg says they recognized their mistake and to even make mention there was a mistake is significant loss of face. I suspect more adjustments back to zero will be made. At this point I don’t think Thailand can afford the old school thinking any longer.

So what is the new school thinking? Say, controls are eliminated and speculators again attack the THB resulting in another rapidly appreciating THB/USD exchange rate. What is the "new" school of thinking on this? Note, Virabongsa was against the capital controls, favoring cutting THB interest rates to weaken the THB, hardly new school either.

Old school = big fish little pond

new school = little fish big pond

The need to make Thailand attractive to people other than tourists, and not let the thinking of we are the only game in town pop into their head, because simply they are not the only game in town anymore.

Changing interest rates and other things this is reactive and not proactive.

OK, little fish, big pond. What would you do under "little fish big pond" to fight speculators who attack the THB so that it appreciates, artificially, to the point where it damages agricultural exports?

[samran]

OK, little fish, big pond. What would you do under "little fish big pond" to fight speculators who attack the THB so that it appreciates, artificially, to the point where it damages agricultural exports?

In the medium run, policies which ensure that the Thai economy is diversified (like a portfolio) so that it isn't held hostage to the whims of speculators. It takes 20 odd years though for developed countries- see Australia and NZ for classic cases of moving from agricultural based economies to ones focused on service provision.

In the short run, capital controls which only deter hot money (in and out of LOS) in my opinion should be kept.

[Old Man River]

OK, little fish, big pond. What would you do under "little fish big pond" to fight speculators who attack the THB so that it appreciates, artificially, to the point where it damages agricultural exports?

In the medium run, policies which ensure that the Thai economy is diversified (like a portfolio) so that it isn't held hostage to the whims of speculators. It takes 20 odd years though for developed countries- see Australia and NZ for classic cases of moving from agricultural based economies to ones focused on service provision.

In the short run, capital controls which only deter hot money (in and out of LOS) in my opinion should be kept.

I absolutely agree. The short run is what Pridiyathorn and Tarisa had to deal with. Their analysis showed that cutting rates wouldn't have worked in this case and they didn't think they had enough time to evaluate it if they did that first. They made the big mistake on the equity markets, no doubt, but they acted and ultimately did the right thing.

Too many people are quick to find fault when they themselves don't know what to do (this is aimed at government officials, not posters on TV, as we aren't supposed to be the experts).

[John K]

BANGKOK (AFP) - Thailand prepared Thursday to lift the last of its controversial capital controls, as the nation's junta leader and the prime minister scrambled to replace the finance minister who imposed them.

The Bank of Thailand announced late Wednesday that it would remove the last of the controls, which had effectively locked up for one year 30 percent of capital inflows to the country.

News the controls would end came just hours after finance minister Pridiyathorn Devakula's surprise resignation Wednesday, creating a new crisis of confidence in a government whose popularity has plummeted since it took power after a coup five months ago.

When the capital controls were imposed in mid-December, they sparked the biggest one-day crash in the history of Thailand's bourse, and forced the government to quickly rescind some of the measures.

That was the first in a series of embarrassing policy flip-flops that have eroded confidence in the government both among investors and among the Thai public.

Thailand's coup leader, General Sonthi Boonyaratglin, and other top military officials huddled with Surayud early Thursday to discuss who should replace Pridiyathorn and how to stem the political fallout from his resignation.

Thai media assailed Surayud for failing to hold his cabinet together, even raising questions about whether the former army chief could survive the latest setback to his government.

"We expect to see a major cabinet reshuffle, which could start from the top," the Nation newspaper said.

"The government's main problems concern its lack of direction and sense of mission, its absence of vision and lack of leadership on the part of the prime minister," the Bangkok Post commented.

But Sonthi told reporters before the meeting that Surayud would not resign.

"He won't surrender easily. I used to work with him, I know he is tough," Sonthi said.

Officials declined to say who might replace Pridiyathorn, but the head of the Export-Import Bank of Thailand, Virabongsa Ramangkura, was widely tipped in Thai media as a leading contender.

Pridiyathorn's appointment as finance minister five months ago had been welcomed as the former Bank of Thailand governor was tasked with overseeing a team of technocrats that was supposed to guide the country smoothly toward elections later this year.

Instead, Pridiyathorn presided over a series of policy disasters that battered the economy and eroded public support for the government, which a poll last month put at 48 percent, down from 71 percent shortly after the coup.

In addition to the capital controls, Pridiyathorn also championed changes to Thailand's foreign investment law, which spooked international companies and raised fears that the kingdom was moving toward a new strain of protectionism.

"The public now lacks confidence in both the political and economic policies imposed by Pridiyathorn," said Sombat Thamrongthanyawong of the National Institute of Development Administration.

Thitinan Pongsudhirak of Chulalongkorn University called Surayud's administration a "sinking ship."

"His resignation raises questions about Surayud's leadership qualities. He picked a very lacklustre, weak cabinet, and now the outcome of that decision is known. They can't work together, they're inept," Thitinan said.

"This is a crisis of stability for the government," he said, adding that Pridiyathorn's resignation raised questions about how smoothly Thailand would be able to move back to democracy.

I guess depending on where you read most or all of the controls have been lifted.

[Meerkat]

But didn't the controls deter longer-term investment as well? If I wanted to invest THB10m in a Thai business venture, I thought that I'd have to park 30% of that money for a year without interest. At best the opportunity cost is a 12month depo rate – say 5% on 3m. At worst it's my prior projected rate of return on 30% of the initial investment. Or did I understand the controls incorrectly?

And who is to really say that it was hot-money entering the Kingdom, or that the THB was being held up artificially high? The SET – even at near its recent highs just prior to the new controls – was considerably undervalued on a P/E basis relative to neighbouring bourses – some of them absolute basket-cases. And of course with USD/THB at 36, that's still a whopping 40%-odd lower than where I remember rates being a decade ago – and don't forget that the vast bulk of the THB's appreciation was actually the USD's depreciation. I think the bigger puzzle was why hadn't more money flowed into the country before.

IMHO capital controls, fixed exchange rates, and any other form of intervention in the markets can only harm an economy in the long-term. Yes, they might appear to help in the short, but that is simply masking the symptoms rather than curing the disease. The markets are remarkably adept (or at least a lot more so than politicians) at determining which countries are more deserving than others of capital.

[Bruce1]

In the long run the best way to defend against currency speculators is to diversify the economy. Thailand has about 42% of its employment in agriculture. If they could get that down to under 5% (as in USA, Aust, Europe etc) then they'd be pretty secure. To do that they needs LOTS of foreign investment, cause no economy can generate sufficient funds internally to build up to that level. So controls on foreign investment are a bad idea. Moreover, they actually need to reduce foreign investment controls to attract more of that investment. And they need big lifts in both manufacturing and the service sector. Are they prepared to adopt the outward-looking, non-protectionist policies to open up the economy to do that? Not this government on the evidence to date, unfortunately.

Edited March 1, 2007 by Bruce1

[Publicus]

Amazing Thailand.

Thais sink into a crisis, are presented with a saviour to assure them all's well again, then spiral downwards into a new crisis, get another new saviour to assure them all's well again...etc...

This seems true of Thaland over the decades as well as being true of Thailand year to year, month to month etc.

So now the question is: Who'll be the new saviour at the Finance Ministry?

The answer most likely is: Another saviour who we already know will sooner rather than later turn out to be another bust. Same for the government as a whole, whether it's Thaksin or some bunch of "gentlemen" generals.

Thailand is a small version of China. So we"ll probably have to wait until China goes bust before we can buy up the whole of the region. The '97 meltdown wasn't big enuff to effectively collapse the whole of the rotten and decrepit Old World, 3rd World culture of the region. The '97 meltdown only produced a Thaksin in Thailand whilst sending off a few of the Old Guard of Old World society, economy, culture, such as Suharto and eventually Mahathir. The next meltdown looks to be more than big enuff in economics and number of economies to clear out the ancient deadwood across the board, in economics, culture, society, politics and government. I eagerly await it.

Edited March 1, 2007 by Publicus

[wintermute]

Thailand is a small version of China. So we"ll probably have to wait until China goes bust before we can buy up the whole of the region. The '97 meltdown wasn't big enuff to effectively collapse the whole of the rotten and decrepit Old World, 3rd World culture of the region.

Thailand and China aren't even close to being comparable. The authoritarian PRC rule has been in charge post WW2. They have such an ironclad grip on that country it's not even funny. If you go around the region you'd see how deeply entrenched they are. When they do have a "problem" it's usually solved really quick and in brutal authoritarian fashion. As I said in another post..consistent corruption can be worked around. China has been consistent since the cultural revolution which is why they are developing at break neck speed. Thailand suffers from inconsistency, poor social development, and stagnation. Not to mention the government keeps changing hands which doesn't help investment.

The '97 meltdown only produced a Thaksin in Thailand whilst sending off a few of the Old Guard of Old World society, economy, culture, such as Suharto and eventually Mahathir. The next meltdown looks to be more than big enuff in economics and number of economies to clear out the ancient deadwood across the board, in economics, culture, society, politics and government. I eagerly await it.

Actually the economies are so tied together these days that a significant dip would also hurt western economies as well. Just look at how that blip in the Shanghai stock market effected stocks globally. That wasn't a real crash though ..more like the market tightening up its belt. A real meltdown would be a combination of bad banking (like in '97) or a slow stagnate recession.

[AsiaCheese]

global markets slump overnight, now pridiyathorn resigns. just a gentle reminder for those a bit slow off the bat, SELL ALL POSITIONS ON THE SET NOW!

An amateur's question:

Is the fall in stock market only a temporary setback, or is this the beginning of a crash, and what effects might that have on the Thai economy, and life for us here?

Now is the time to buy.

Don't wait be positive.

In five years The Dow and The Set both at 17500.

One dollar will get one Baht.

Figure how much money you have.

Uhhhhm - and what sort of thing do you dream of at night???

[mumbu]

Before blaming speculators on baht appreciation, one should take into account a number of objective factors: booming economy, relatively high interest rates, budget and current account surpluses , attractive stock market valuations( I am talking about last couple of years under Thaksin), general rise of Asian economies and revaluation of Chinese renbini. This is an incredible combination. The well-known measure introduced by bank of Thailand was plain stupid. If one combines factors mentioned above with growing tourism, hot real estate market (again under Thaksin), Thailand really had a chance to enter elite club (Japan, South Korea, Singapore, HK, Taiwan). I am afraid under this moronic, ksenofobic government it is over.

Edited March 2, 2007 by mumbu

[younghusband]

OK, little fish, big pond. What would you do under "little fish big pond" to fight speculators who attack the THB so that it appreciates, artificially, to the point where it damages agricultural exports?

In the medium run, policies which ensure that the Thai economy is diversified (like a portfolio) so that it isn't held hostage to the whims of speculators. It takes 20 odd years though for developed countries- see Australia and NZ for classic cases of moving from agricultural based economies to ones focused on service provision.

In the short run, capital controls which only deter hot money (in and out of LOS) in my opinion should be kept.

This is a laughably ignorant post.Firstly, many years ago Thailand diversified away from being a predominantly agricultural based economy.If you examine exports the main items are integrated circuits, computer parts, jewellry, furniture etc.Agriculture forms only about 13% of GDP, goods and services being the main component of which tourism is of course very significant.Overall I would say Thailand has less of a problem in this area than NZ and Australia, which excepting commodities,produces very little the rest of the world wants to buy.

Secondly, the poster retains a very naive attitude towards capital controls in the belief they deter hot money.In a very short term sense they do but the so called cure is worse than the disease.The beauty of a free economic market is that it is self regulating, and great damage can be done where markets are artificially protected.

[Old Man River]

In the long run the best way to defend against currency speculators is to diversify the economy. Thailand has about 42% of its employment in agriculture. If they could get that down to under 5% (as in USA, Aust, Europe etc) then they'd be pretty secure. To do that they needs LOTS of foreign investment, cause no economy can generate sufficient funds internally to build up to that level. So controls on foreign investment are a bad idea. Moreover, they actually need to reduce foreign investment controls to attract more of that investment. And they need big lifts in both manufacturing and the service sector. Are they prepared to adopt the outward-looking, non-protectionist policies to open up the economy to do that? Not this government on the evidence to date, unfortunately.

Bruce, what you are calling for is, of course, the Singapore model. Singapore, a country with little land and few natural resources has become a regional economic power. Speculators don't attack the Sing Dollar. Thaksin was following this model, which included a Lee Kuan Yu role for himself, but ran afoul of the military as it was feared he was gaining too much power in a country that already has a very highly revered King. Couple this with the xenophobic tendencies of its populace, and it becomes evident that such an economic model is a non starter here.

[Old Man River]

OK, little fish, big pond. What would you do under "little fish big pond" to fight speculators who attack the THB so that it appreciates, artificially, to the point where it damages agricultural exports?

In the medium run, policies which ensure that the Thai economy is diversified (like a portfolio) so that it isn't held hostage to the whims of speculators. It takes 20 odd years though for developed countries- see Australia and NZ for classic cases of moving from agricultural based economies to ones focused on service provision.

In the short run, capital controls which only deter hot money (in and out of LOS) in my opinion should be kept.

This is a laughably ignorant post.Firstly, many years ago Thailand diversified away from being a predominantly agricultural based economy.If you examine exports the main items are integrated circuits, computer parts, jewellry, furniture etc.Agriculture forms only about 13% of GDP, goods and services being the main component of which tourism is of course very significant.Overall I would say Thailand has less of a problem in this area than NZ and Australia, which excepting commodities,produces very little the rest of the world wants to buy.

Secondly, the poster retains a very naive attitude towards capital controls in the belief they deter hot money.In a very short term sense they do but the so called cure is worse than the disease.The beauty of a free economic market is that it is self regulating, and great damage can be done where markets are artificially protected.

You are sending posts based on emotion again. Settle down and think about it. The main items exported are electronic items that contain a high degree of imported items. As I am sure you know, when the THB strengthens, the imported raw materials are cheaper, creating a natural hedge for electronic parts assembled and exported.

While in theory I fully agree with the beauty of a free market, in a country like Thailand with over 40% of its population tied up in agriculture, it can't afford to allow agricultural exports to crash. Theoretically, it can, but in practice this country has no safety net for its people. The only thing it can do is support its ag exports as best it can, and not letting the THB strengthen vis a vis the USD to a greater extent than its competitors is one of the only things it can do. I realize this is artificial in a way, but they don't have many other avenues.

[Hampstead]

OK, little fish, big pond. What would you do under "little fish big pond" to fight speculators who attack the THB so that it appreciates, artificially, to the point where it damages agricultural exports?

In the medium run, policies which ensure that the Thai economy is diversified (like a portfolio) so that it isn't held hostage to the whims of speculators. It takes 20 odd years though for developed countries- see Australia and NZ for classic cases of moving from agricultural based economies to ones focused on service provision.

In the short run, capital controls which only deter hot money (in and out of LOS) in my opinion should be kept.

This is a laughably ignorant post.Firstly, many years ago Thailand diversified away from being a predominantly agricultural based economy.If you examine exports the main items are integrated circuits, computer parts, jewellry, furniture etc.Agriculture forms only about 13% of GDP, goods and services being the main component of which tourism is of course very significant.Overall I would say Thailand has less of a problem in this area than NZ and Australia, which excepting commodities,produces very little the rest of the world wants to buy.

Secondly, the poster retains a very naive attitude towards capital controls in the belief they deter hot money.In a very short term sense they do but the so called cure is worse than the disease.The beauty of a free economic market is that it is self regulating, and great damage can be done where markets are artificially protected.

You are sending posts based on emotion again. Settle down and think about it. The main items exported are electronic items that contain a high degree of imported items. As I am sure you know, when the THB strengthens, the imported raw materials are cheaper, creating a natural hedge for electronic parts assembled and exported.

While in theory I fully agree with the beauty of a free market, in a country like Thailand with over 40% of its population tied up in agriculture, it can't afford to allow agricultural exports to crash. Theoretically, it can, but in practice this country has no safety net for its people. The only thing it can do is support its ag exports as best it can, and not letting the THB strengthen vis a vis the USD to a greater extent than its competitors is one of the only things it can do. I realize this is artificial in a way, but they don't have many other avenues.

Yes they do

they had many chances over the last 6 months to reduce interest rates not just reduce them in a last ditch attempt over the last 2 months

this would see more money flow out of savings and into the economy.

also they had many an opportunity over the last 6 months to relax the rules on money being able to leave thailand, so as to allow thai nationals to send more money overseas for investment purposes.

but they chose a huge build up of baht to be stored in the thai banking system, not only by foreigners but also by thai nationals, who have certain rules on how much money they can execute to another country. This is why many thai wealthy individuals have had to use the black market money transfers to send money out of thailand, for which the chinese have the majority of this market.

their excuse for speculators is very far fetched

as even the bot knows full well that funds were coming to thailand as thailand was becoming a financial treasury centre for asia, being able to execute deals back and forth to execute deals for example the many ipo's going on in hong kong and china

the excuse of december made by bot that 2 billion dollars coming into thailand was speculative was an elaboration of the real truth, in fact most of this money was from the sale of icbc bank ipo in hong kong, and as the shares were sold in late november and december, the same money which left thailand to execute the deal was now arriving back to thailand after the sale of the shares.

[Old Man River]

OK, little fish, big pond. What would you do under "little fish big pond" to fight speculators who attack the THB so that it appreciates, artificially, to the point where it damages agricultural exports?

In the medium run, policies which ensure that the Thai economy is diversified (like a portfolio) so that it isn't held hostage to the whims of speculators. It takes 20 odd years though for developed countries- see Australia and NZ for classic cases of moving from agricultural based economies to ones focused on service provision.

In the short run, capital controls which only deter hot money (in and out of LOS) in my opinion should be kept.

This is a laughably ignorant post.Firstly, many years ago Thailand diversified away from being a predominantly agricultural based economy.If you examine exports the main items are integrated circuits, computer parts, jewellry, furniture etc.Agriculture forms only about 13% of GDP, goods and services being the main component of which tourism is of course very significant.Overall I would say Thailand has less of a problem in this area than NZ and Australia, which excepting commodities,produces very little the rest of the world wants to buy.

Secondly, the poster retains a very naive attitude towards capital controls in the belief they deter hot money.In a very short term sense they do but the so called cure is worse than the disease.The beauty of a free economic market is that it is self regulating, and great damage can be done where markets are artificially protected.

You are sending posts based on emotion again. Settle down and think about it. The main items exported are electronic items that contain a high degree of imported items. As I am sure you know, when the THB strengthens, the imported raw materials are cheaper, creating a natural hedge for electronic parts assembled and exported.

While in theory I fully agree with the beauty of a free market, in a country like Thailand with over 40% of its population tied up in agriculture, it can't afford to allow agricultural exports to crash. Theoretically, it can, but in practice this country has no safety net for its people. The only thing it can do is support its ag exports as best it can, and not letting the THB strengthen vis a vis the USD to a greater extent than its competitors is one of the only things it can do. I realize this is artificial in a way, but they don't have many other avenues.

Yes they do

they had many chances over the last 6 months to reduce interest rates not just reduce them in a last ditch attempt over the last 2 months

this would see more money flow out of savings and into the economy.

also they had many an opportunity over the last 6 months to relax the rules on money being able to leave thailand, so as to allow thai nationals to send more money overseas for investment purposes.

but they chose a huge build up of baht to be stored in the thai banking system, not only by foreigners but also by thai nationals, who have certain rules on how much money they can execute to another country. This is why many thai wealthy individuals have had to use the black market money transfers to send money out of thailand, for which the chinese have the majority of this market.

their excuse for speculators is very far fetched

as even the bot knows full well that funds were coming to thailand as thailand was becoming a financial treasury centre for asia, being able to execute deals back and forth to execute deals for example the many ipo's going on in hong kong and china

the excuse of december made by bot that 2 billion dollars coming into thailand was speculative was an elaboration of the real truth, in fact most of this money was from the sale of icbc bank ipo in hong kong, and as the shares were sold in late november and december, the same money which left thailand to execute the deal was now arriving back to thailand after the sale of the shares.

Yes, they could have relaxed the rules to allow Thai's to move money out sooner, but better late than never.

The IPO is well known, but why was the money parked in Thailand in the first place? Why not in other regional countries with higher rates?

On interest rates, the BOT's analysis is that effective rates in other competing countries were already higher than Thailand's rates, but their currencies were weaker. It was their view that cutting interest rates would not be effective. As for why not lower rates sooner, Thailand raises and lowers its interest rates depending on its inflation rates, not its currency levels. With inflation currently at its lowest level in almost 3 years, now there is room to lower rates should the new FM decide so.

Let's not get into discussions about the black market. If you wish to do so, make your complaints directly to the BOT.