Thread: BREAKING NEWS: Foreign capital controls 'to end today'

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.

Bank of Thailand Governor Tarisa Watanagase told the Foreign Bankers' Association on Wednesday night that the controls would be lifted on Thursday, more than two months after the measures were introduced.

"Tomorrow (Thursday), the central bank will have a final review on the measures regarding capital inflows," she said.

"Fully hedged bonds, mutual funds and property funds will be exempted from the 30 percent reserve requirement."

Reserve requirements imposed in mid-December effectively lock up for a year 30 percent of any fund inflows coming into Thailand for financial investment.

The day after the announcement the Thai stock market nosedived 15 per cent, the biggest one-day drop by value in the 31-year history of the bourse, due to panic selling over the currency rules imposed to curb the Thai baht's rise.

The bank was forced to make an abrupt U-turn on some of the requirements, and eased others in the following weeks.

Tarisa's announcement that the remaining requirements would be lifted came just hours after Finance Minister Pridiyathorn Devakula announced his resignation.

Pridiyathorn had defended the reserve rules as a way of helping exporters by trying to weaken the baht, which has gained sharply against the dollar, making Thai products more expensive overseas.


Bangkok Post

No. 13/2007

Revision of Measures to Prevent Thai Baht Speculation and Options on Unremunerated Reserve Requirement

The Bank of Thailand has issued a circular to notify financial institutions of a revision of the Measures to Prevent Thai Baht Speculation. It has also issued a Notice of the Competent Officer to provide additional options on the Unremunerated Reserve Requirement (URR) for investment inflows in debt securities and unit trusts as follows:

1. The requirement for non-residents to hold government bonds, treasury bills and the Bank of Thailand (BOT) bonds longer than 3 months in the circular under the Measures to Prevent Thai Baht Speculation dated 4 December 2006 is revoked.

2. Non-residents selling foreign currencies against Thai Baht for investment in bonds, treasury bills, debentures, bills of exchange, promissory notes and unit trusts, both listed and unlisted in the Stock Exchange of Thailand, can either comply with the URR or fully hedge their investments with financial institutions in Thailand.

3. The above foreign exchange hedging must be in the forms of FX Swaps or Cross Currency Swaps with custodian banks for a maturity of 3 months and above. Non-residents are required to roll over the swap contracts throughout their investment periods.

4. The investment that has been fully-hedged must be deposited into a Special Non-residents Baht Account for Debt Securities and Unit Trusts (SND). The daily outstanding balance in such an account is limited to 300 million Baht per non-resident. SND are allowed only for settlements related to investment in debt securities and unit trusts.

5. Investors are required to deliver Thai Baht to settle the swap contract at maturity. They are not allowed to unwind the swap contracts.
Investment funds previously brought in can be reinvested and must be reallocated from NRBAs to SNDs prior to March 30, 2007.

Apart from providing an option to non-residents investing in debt securities and unit trusts, the aforementioned revision also provides investors with more flexibility in holding government bonds, treasury bills and BOT bonds shorter than 3 months to reinvest in other types of debt securities. However, the investment funds must remain in Thailand no less than 3 months.

The revision takes effect from 15 March 2007.

Bank of Thailand
1 March 2007

Originally Posted by William

the finance minister who was their chief supporter announced his resignation.

Shame he never killed himself. Idiot

Originally Posted by William

The Bank of Thailand has issued a circular to notify financial institutions of a revision of the Measures to Prevent Thai Baht Speculation

Will they read it or understand it?

No, the legacy will be that doing business here is now more difficult as you will have to explain the real laws to dumb Thai officials who are hooked up on laws or rules that dont exist any more.
Thick bastards

No plobrem, they're inventive, will soon come up with something new to spook farang investors.