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Tom Yam soup
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YongJiu
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19-Dec-2006 12:55
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19 Dec 2006 09:10 CST DJ MARKET TALK: BOT FX Controls May Spur A THB NDF Mkt - UBS 0110 GMT [Dow Jones] Bank of Thailand's latest FX measures effectively a 10% tax on short-term capital flows, says UBS (financial institutions required to withhold 30% of foreign currencies bought or exchanged vs THB as form of required reserve, two-thirds of reserves only refundable of investment less than 1 year). Says controls likely to spur development of a THB NDF market as investors seek other means of hedging THB exposure or taking a view on THB; will also siphon liquidity, effectively monetary tightening: "this is unwarranted given domestic consumption and investment demand is already faltering and inflation has eased significantly." (WJK) 0000 GMT [Dow Jones] BOT's capital inflow measures yesterday will inevitably reduce much of recent speculative pressure on THB, say analysts; "This is going to spook investors," Marc Chandler at Brown Brothers Harriman says; "Thailand has been a big recipient of (capital) flows," particularly compared to some of its neighbors like India, Japan, Korea. Move a significant escalation of Thailand's recent battle to stop its THB from gaining. While THB may weaken in near term on knee jerk reaction, another result of move may be a shift short-term flows to some of Thailand's neighbors. "If speculators can't go into Thailand, I think they'll go somewhere (else) in East Asia," Chandler says, singling out Malaysia but also China, potential alternatives. (CNG) |
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newmoon
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19-Dec-2006 12:23
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The central bank of Thailand has changed trading rules in midstream. This has caused a drop in the baht and the support of the bangkok stock index below 710 has broken the support level. Regional stock markets will be affected because of loss of confidence as rules can be changed overnight-like the immediate imposition of stamp duty on properties bought in singapore |
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