Why did Thailand implement a floating exchange rate during the financial crisis?

I don't know where the words you quote come from. Personally, I think this sentence is actually wrong, the Thai people are not the "last resort", but a forced move in desperation.

1. Thailand's long-term fixed exchange rate system, when the Thai baht is sold in the international market, in order to maintain its fixed exchange rate, Thailand must use a large amount of foreign exchange reserves to buy Thai baht in the foreign exchange market, resulting in a serious loss of foreign exchange reserves. If there are not enough foreign exchange reserves to maintain a fixed exchange rate, the exchange rate will be higher than the real value, and the balance of payments deficit will increase, which will inevitably further reduce foreign exchange reserves.

2. At the time of the crisis, Thailand took a series of measures to maintain the fixed exchange rate system, but all of them failed

1) In February 1997, Thailand experienced the first Thai baht depreciation turmoil, and the Bank of Thailand** used 2 billion US dollars of foreign exchange reserves to intervene in the foreign exchange market to quell the turmoil.

2) On May 12, 1997, the depreciation of the Thai baht was once again rumored in the international financial market, triggering a sharp fluctuation in the exchange rate of the Thai baht. The Bank of Thailand, through the member countries of the "Bank of East Asia** Presidents' Meeting", jointly intervened in the foreign exchange market and maintained the exchange rate at 25 baht to 1 US dollar at a cost of 10 billion US dollars.

3) But at this time, the pressure of the depreciation of the Thai baht further increased, and there was panic selling in the foreign exchange market, and the Bank of Thailand ** intervened several times, and the foreign exchange reserves fell sharply.

3. The implementation of the floating exchange rate system can actually be understood as the fact that ** can no longer take out money to stabilize the exchange rate, and announced its surrender. By the end of June 1997, Thailand's foreign exchange reserves had fallen by $30 billion and it had lost its ability to continue intervening in the foreign exchange market. On 2 July 1997, Thailand** was forced to abandon its peg exchange rate system and implement a managed floating exchange rate system.

It's not a no-do, it's really not a no-no.

It feels good to support it.

Because Thailand had no foreign exchange reserves at that time, it was impossible to interfere with the exchange rate of its own currency, so it was necessary to implement a floating exchange rate, which is a change led by market supply and demand, if an economy is not very strong, and its own currency is not an international currency, it is easy to suffer a great economic impact after the implementation of the floating exchange rate, especially by the impact of hot money.

Because of Thailand's lesson, the Chiang Mai Agreement was conceived, and the general idea was that 13 countries in East Asia would establish a network of foreign exchange support, and when one country was hit by an external force, the other countries would provide timely support with foreign exchange reserves, and the total amount now reached $80 billion.

The implementation of the floating exchange rate is not the use of the US dollar, because at that time Thailand could only choose the floating exchange rate, because the Thai baht is not an international currency, so if Thailand wants to regulate the Thai baht exchange rate, it must use foreign exchange reserves to adjust the purchase and sale in the international market, but at that time Thailand had no foreign exchange reserves, and could not control the exchange rate of the Thai Zhu, so it must be changed to a floating exchange rate, that is, the exchange rate of the national currency is determined by the supply and demand of the national currency in the market, and the Thai financial system as a whole is fragile. Therefore, at that time, Solos took the opportunity to sell a large number of Thai Zhu, which caused the Thai baht to depreciate significantly. Moreover, at that time, Thai banks also owed a lot of foreign debts, and in order to repay the debts, financial institutions also sold a large number of Thai Zhu in exchange for US dollars to repay the debt, which accelerated the collapse of the Thai baht.

Before the financial crisis, Thailand's economy was developing rapidly, but there were bubbles in many markets such as real estate, and Thailand implemented a fixed exchange rate pegged to the US dollar, that is, the US dollar appreciated, and Thailand's economy was very dependent on import and export. At this time, due to the rapid development of the American economy, but also because of international speculators such as George. Soros and his ilk observed the problems in Thailand, which has a fixed exchange rate, and because of the contradiction between the rapid development of his country's import and export industry and the lack of dollar reserves, international speculators saw the opportunity to buy the dollar and the Thai baht at the same time to speculate on the two currencies.

This is Thailand has to use its foreign exchange reserves to raise the Thai baht and maintain a pegged relationship with the US dollar, this is Soros and his ilk selling a large amount of Thai baht, buying low and selling high to earn the difference, due to the lack of foreign exchange reserves in Thailand, they were eventually squeezed to death, and had to give up the fixed exchange rate and implement a floating exchange rate, in order to make a profit and keep their country's import and export industry.

That's probably the process, financial predator George. Soros's vision and courage are indeed very powerful.