Thai minister seeks curbs on currency speculation

Thai minister seeks curbs on currency speculation

WASHINGTON (Reuters): Thailand's Foreign Minister Surin Pitsuwan urged the international community on Monday to come up with ways to control currency speculation, warning that market- opening reforms in developing nations were at stake.

"The world, I think, has an urgent need to come together and look very, very carefully... into the negative impact of this very, very volatile speculative activity," Surin said.

"If we can't come up with some agreement on that, then you know what the negative impact is going to be. Every economy is going to be very hesitant, very reserved, very concerned about opening up, about liberalization," he told a news conference in Washington.

At the beginning of this month, Malaysia's central bank slapped curbs on foreign exchange trade to shield the battered ringgit currency from global instability and cut off speculators, long blamed by Prime Minister Mahathir Mohamad for Asia's financial woes.

Malaysian policies have heightened concerns that other developing nations, hit by financial crises in Asia and Russia, would follow with tight controls of their own to shelter their economies and currencies from the contagion.

International financier George Soros warned a U.S. congressional panel last week that Mahathir put Asia's recovery at risk and encouraged more flight of capital.

After Malaysia's announcement, Thailand made clear it saw no need to impose additional capital controls to help its economy, which is riding its worst economic crisis in decades.

Surin, during a trip to Washington, said confidence was returning to Thai financial markets, with the help of an IMF- arranged $17.2 billion rescue package agreed last year.

"Rather than withdrawing or closing down, or trying to adopt measures that would be counterproductive, that would be retrogressive, we have been determined to stay the course of free market, of opening up," he said. "We are determined to do whatever is expected of us to do."

But Surin said the IMF, the World Bank and major industrial nations, scheduled to meet in Washington in early October, needed to develop ways to "lessen the negative impact" of currency speculation.

"Some mechanism of monitoring, of supervision, of control of major movement of capital from one place to another...on the basis of speculation, I think is in order," he said. "We do need a very, very close international cooperation on this in order to bring a semblance of order."

Without singling out Malaysia, Surin warned governments against retreating from market-opening reforms.