Thai stocks suffered their biggest drop since Asia's 1997 financial crisis as foreign investors took fright at drastic measures to rein in the baht.
The currency dropped 2 per cent from yesterday's 9.5-year high after the central bank, worried that strength in Asia's best-performing currency would hurt exporters, imposed controls on short-term speculative money inflows.
The main stock index plunged more than 13 per cent to a two-year low at one point, wiping more than $20 billion off the value of southeast Asia's third-largest bourse.
Reaction in the bond markets was equally ruthless as foreign investors rushed for the exit, forcing prices sharply lower and pushing yields up 20-30 basis points for all maturities.
"Please call an ambulance, there is a bloodbath," a dealer at a domestic brokerage said. "Foreign players seem to be selling all maturities today, but I think it's only the first round. There is a lot of money already in the Thai markets. If they're pulling out, we're dead," he said.
But the central bank retorted it was too soon for any review of a measure analysts described as "draconian" and a "straitjacket" for equity investors.
The reaction was far more severe than the 4 per cent stock market fall - and quick recovery - that followed the bloodless September 19th coup that ousted Prime Minister Thaksin Shinawatra and ended a long political crisis.