Regional stock markets also fell in tandem, with Jakarta down 2.85 per cent; Kuala Lumpur, down 2 per cent and Singapore, down 2.23 per cent.

Meanwhile, the Thai baht depreciated two percentage points to about Bt36 per dollar. Until yesterday, the Thai unit had this year risen by a total of 16 percentage points against the dollar.

Deputy premier and finance minister Pridiyathorn Devakula said the Bank of Thailand had acted in the interests of the private sector, especially exporters who were suffering from the strong baht.

In other words, the government wanted to take care of the Thai economy over the interests of foreign speculators.

Yet, critics said the measures imposed by the central bank have probably been too harsh, resulting in the stock market's free fall.

Teerana Bhongmakapat, an economist at Chulalongkorn University, said the reserve requirement on Thailand's capital inflows should be cut to five per cent from the current 30 per cent so that negative impacts are lessened.

Doing so would effectively cut the capital inflow tax to 2.53.3 per cent instead of 10 per cent at present.

Currently, the central bank requires 30 per cent reserve on foreign capital brought into Thailand, meaning that if investors/speculators pull back their money within three or six months, they would lose onethird of the reserves or 10 per cent.

But if they get money back after a year, they will be subject to no tax.

In other words, the challenge is how the central bank could minimise the costs (of capital control) and the side effects of such a policy to curb the excessive rise of the baht which is key to the competitiveness of Thai exports.

Currently, the export sector accounts for 60 per cent of the country's GDP.

As for the stock market, the negative impacts were unimaginable as yesterday's crash was the biggest oneday fall in the bourse's 31year history.

The composite SET Index plunged to 721.85 at the opening bell and headed south further to fall by 10 per cent at 10.30 am and resulted in the firstever implementation of the firststep circuit breaker to halt trading for 30 minutes by the Stock Exchange of Thailand (SET) since it was created in 1997.

Panic selling remained after the stock market resumed trading and it pushed the market down to almost 20 per cent to the day's trough at 587.92 before rebounding slightly to close the day at 622.14, or 14.84 per cent drop.

Turnover was also marked the alltime high at Bt72.13 billion if excluding the Bt73billion big lots of Shin Corp deal in January 23, 2006 when the turnover amounted to Bt94.06 billion.

Business Reporters

The Nation