"I am not sure whether the Bank of Thailand and the Finance Ministry had consulted each

other before [introducing the

capital control measure]. If the discussion did not take place, then the central bank was having

too much independence," said Chaturon Chaiseang, the leader of the Thai Rak Thai Party.

"I guess the finance minister must have known about the measures beforehand. So the question is why did they not think the whole thing through carefully. This is the damage from a government that does not come through democratic means."

MR Pridiyathorn Devakula,

the deputy prime minister

and finance minister, yester-

day sought to play down the damage created by the indiscriminate capital control measure - principally designed to curb baht speculation - that also had a severe side-effect of damaging the equity market badly. He indicated that nobody should assume responsibility as the mistake has been corrected.

Case closed.

But Abhisit Vejjajiva, leader

of the Democrat Party, said it

was not that easy to call the case closed as the finance minister's remarks had hurt foreign investors confidence.

"Most people have found it difficult to accept this because a damage of several hundred billion baht has occurred. If correcting the mistake means assuming responsibility, then I would not agree. But I don't want this matter to be politicised. We should let good governance play the role here," he said.

"Since we have made a mistake, we have to admit it. And to restore investor confidence we have made it clear as to who announced the capital controls measure and who revoked the measure, which is quite confusing."

Seamico Securities also questioned if there was political inference. If the Bank of Thailand was solely responsible for the measure, then on Tuesday evening why did no top officials at the central bank appear side by side with Pridiyathorn during his televised interviews?

Some Bt820 billion in market capitalisation was wiped out from the stock market on Black Tuesday following the central bank's draconian rules on capital controls, which scared off foreign investors.

The central bank intended to curb the sharp baht rise, which threatened to damage Thai exports and wreak havoc on the Thai economy. But the indiscriminate capital control measure badly hurt the stock market because no foreign funds would invest in a market which requires them to surrender 30 per cent of their money to another entity, which is the central bank in this particular case.

Later in the evening, after the severe punishment of the Thai stock market, Pridiyathorn was forced to back-track a half-step by announcing the capital control rules would not apply to the stock market but would apply to the money market only.

Thailand has immediately become a subject of condemnation and suspicion for its policy flip-flop. Market capitalisation was recovered by more than Bt500 billion, but questions remain thick in the air as to what kind of macroeconomic policy Thailand would be pursuing going onward.

Dr Supavud Saicheua of Phatra Securities said it would be tough for Thailand to reclaim its credibility. "We have to be careful not to create an impression that we are going to pursue an isolationist policy. Both Fitch and Moody's, the credit agencies, have started to get a bit suspicious. So we have to avoid this trend."

Frederic Neumann of HSBC Markets (Asia) said the erratic policy course of Thailand implemented over the past few days has raised questions over the credibility of the current administration and its macroeconomic management.

"While some measures aimed against further baht appreciation were expected, actual policy announcements have far exceeded these expectations, causing confusion in capital markets. Moreover, the authorities provided little guidance as to the actual implementation of their proposed rules, leaving market participants short of information," he said.

"Crucially, however, the administration appears to have misgauged the impact of the new exchange controls, giving the impression that the measures had not been well thought out. These concerns add to the impression that the government might steer away from Thailand's long-held tenet of relatively free financial markets."