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[Snowy]

Speculation rife on end to capital control
by PARISTA YUTHAMANOP

The financial market has been speculating that the Bank of Thailand will soon lift capital control measures as the baht continues to weaken.
The baht continued to appreciate steadily until late July, when problem in the US sub-prime housing mortgage market started to play out.

The collapse of the sub-prime market has affected Asian regional stock markets and weakened currencies as western investors sold assets to offset losses at home.

Usara Wilaipich, senior economist with Standard Chartered Bank, said the central bank should lift the capital controls not to stop arbitrage activities, but to improve bond market liquidity.

The capital controls, imposed last Dec 18, have created a two-tier baht market as offshore investors found it harder to buy baht in the local market. The onshore baht rate stood at 34.06/08 to a dollar yesterday, compared with 31.65/69 offshore.

Miss Usara said the baht was expected to weaken rapidly if it reached 34.15 onshore to a dollar, as demand would rise sharply from investors to cover short positions.

More: http://www.bangkokpost.net/topstories/tops...s.php?id=120873