Monday, December 18, 2006

Thailand Restrictions

The Central bank of Thialian annonced a new round of restrictions to stop the apprciation of the Baht. Basically they are trying to eliminate short term speculation on the currency. The restrictions are as follows:

1. 30% of all foreign inflows into Thailand will (from Tuesday) have to be
placed unremunerated with the BoT.

2. If the funds are withdrawn within 1 year then 10% of the total investment
will be kept by the BoT as a penalty

3. This is effectively a tax for all investments by foreigners if withdrawn
within one year made much worse by the dead weight loss of only being able to
`use' 70% of the invested money

4. Trade and tourism flows are excempt. FDI flows will be allowed to use the
30% once the correct documentation is provided

This is certainly a negative for investment into the counrty. It has had a slight spillover effect in the Region. Korea,Taiwan,Singapore and the rest of the region have all weakened against the dollar. I think people are underestimating this situation. I will keep you posted.



Anonymous Anonymous said...

These seem like crazy measures. Still Im sure they know what they're doing (yeah right...).

10:31 AM  

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