Thailand: An Imbalance of Payments
In June 1997, Thailand's currency became the object of intense speculation as the country's balance of payments was in tatters. Amidst the government's efforts to turn things around, finance minister Dr Amnuay Viravan resigned over policy disagreements and the Thai stock market plunged as investors feared a currency devaluation. As Amnuay's successor, Thanong, tried to pick up the pieces, he uncovered an awful secret: Thailand's central bank had virtually no liquid foreign exchange reserves left to defend its exchange rate. What action should he take? And, more importantly, what action could he take?