On Monday 18th December 2006, the Bank of Thailand imposed a blanket 30% reserve requirement on all foreign transactions against the baht in a bid to stem inflows that had helped push the currency to a nine-year high at nearly 35 to the dollar.
Tuesday 19th (Black Tuesday) The new rule spurred panic selling on the SET (Stock Exchange of Thailand), with the index plunging 14.84% in its worst one-day loss. Policymakers immediately announced that foreign stock investments would be exempt from the reserve rule, which helped boost the index 11.16% on Wednesday 20th.
The property market was also affected with many foreign property investors putting a hold or even pulling out from purchases as the rules were still very unclear.
Aliwassa Pathnadabutr, managing director of CB Richard Ellis Thailand, said the Bank of Thailand clarified yesterday that property including land and condominiums would be exempt from the reserve requirement on short-term capital inflows. Foreign purchasers of condominiums can bring funds into Thailand to make purchases but buyers should clearly state the project name and unit number when remitting funds, she said.
”We welcome this clarification which means that foreign property purchasers are not affected by the new regulations. We believe that this will reassure existing and potential property purchasers,” she said.
There are still many foreigners who want to purchase condominiums in Thailand, both to live in and as long-term investments, she said.
Further information can be obtained from the legal section of Business Mission Asia – http://www.businessmissionasia.com/
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