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Published on February 27, 2008

Surapong said Samak's move was aimed at prodding officials to see if there was anything Thailand could learn from the systems used by neighbouring countries.

Samak made the call during a gathering of more than 800 officials. They were told to review how China, Malaysia and Japan handled their foreign exchange systems.

The move sparked fears Thailand may go back to manipulating the baht as a weak currency.

The baht closed at a 10-year high of 32.25-32.26 against the dollar yesterday, as exporters rushed to sell dollars on fear of further strengthening of the baht. Prior to the 1997 financial crash, the local currency traded at 25 against the dollar.

Malaysia used the fixed exchange system to curb currency speculators during the 1997 Asian crisis. While it was effective in stopping the ringgit from rising, it paid a heavy price in creating mistrust and closed off foreign investment to the country for several years.

Surapong said systems that worked for one country might not work for another.

He said Thailand had used the floating exchange rate system since 1997 and it seemed to be good for the country at present.

Nonetheless, he did not rule out a possible change, saying: "The exchange rate system is not limited to just fixed or floating systems."

The Samak government is facing some challenges as the baht strengthens. Some fear it will erode the competitiveness of exports. But imports such as oil, technology and raw materials will be cheaper as they are quoted in dollars.

The government has yet to decide whether to abolish capital controls, a popular platform used by several parties including the opposition during the last election.

Investors expect Surapong to give a hint as to what the decision will be during a visit to the Stock Exchange of Thailand today.

It is his first visit to the bourse since becoming finance minister. He is expected to outline a policy to boost confidence for Thai shares at a seminar at the exchange.

The Nation