Get baht, Jojo

Confusion may not be as hurtful as currency controls, but not far from it when it comes to markets and their "certainty" lodestone. And confusion is the state of play at the moment in the Thai baht markets following yesterday's surprise move to clamp down on baht convertibility.

Felix Salmon at Economonitor has a few posts, which alerted Guambat to the flux, and Bloomberg has been working whilst Guambat slept to keep the story updated. Guambat still has grit in his eyes, arising early for a slow flight to neighbouring islands, but wishes to keep track, as best as he might, of the developments. Still, it is more confusing than clear at the moment.

Bank of Thailand Struggles with Baht Speculators

The government seems to have backed away from the currency controls, and prices may recover tomorrow.
The flip-flop shows the chaos of government in Thailand, where a military regime was established after civilian politics led to a stalemate. But the fact that the markets had not suffered earlier, as the political chaos grew, shows the very high risk-tolerance of international investors.
That willingness to absorb risk will, at some point, seem foolish, and the rush to the exits, when and if it comes, may lead other countries to quickly impose currency controls of their own.

Thailand proves that policymakers still get things spectacularly wrong

What on earth is going on in Thailand? First the government tried to implement draconian capital controls; when the stock market plunged, it changed its mind, and now everybody is just confused:
Personally, I just find it refreshing that occasionally policymakers can still get things utterly, spectacularly, obviously, wrong. I was beginning to think that the whole world was being run by boringly predictable technocrats, but evidently there are still pockets of the emerging markets where crazy decisions can still result in decimated markets. Anybody fancy an Ecuadorean default?

Thailand Abandons Limits on Foreign Stock Investments (Update6)By Suttinee Yuvejwattana and Margo Towie

The government lifted a requirement that banks lock up 30 percent of new foreign-currency deposits for a year for funds earmarked for stocks, Finance Minister Pridiyathorn Devakula said in Bangkok.

"The surprising speed and responsiveness of this policy reversal should help forestall a deep and lasting impairment of Bank of Thailand credibility," Michael Kurtz, a strategist at Bear Stearns Asia Ltd. in Hong Kong, wrote in a note to clients. "We expect Thai equities on Wednesday to undo a large portion of Tuesday's decline."

Thailand's government exempted stocks from the central bank rule that international investors must pay a 10 percent penalty unless they keep funds in the country for a year. The policy reversal illustrates Thailand's dependence on foreign investment and the degree to which investors resent restrictions on their investment decisions.

"The stock market has fallen too much today," Pridiyathorn told reporters at a press conference. "This is the side effect of the central bank's measure, but we have fixed it already."