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Currency Pact
July 10, 2007

Agreement expanded to prevent crisis
Japan and Thailand on July 10 expanded an existing currency swap agreement with their intention to resolve balance of payments and short-term liquidity issues in case either country needed financial assistance, according to a senior Thai Finance Ministry official in Bangkok. 

Fiscal Policy Office director-general Pannee Sathavarodom said the agreement was part of the pact between the 10-member Association of Southeast Asian Nations (Asean) plus China, South Korea and Japan during the Chiang Mai Initiative on bilateral currency transfers established in May 2000.

Under the agreement made between Thailand and Japan, Tokyo will now offer up to US$6 billion from its foreign exchange reserves to Thailand in the event of a currency crisis. Thailand will provide up to US$3 billion to Japan in exchange for Japanese yen if needed.

Also, the amount of loan would be increased to 20% from the current 10% before a borrowing country could seek financial assistance from the International Monetary Fund (IMF), Mrs. Pannee said.

She said the bilateral agreement would further boost Thailand's credibility in international financial markets and also to would-be foreign investors. The agreement will carry a three-year maturity date, starting from when it is endorses.  TNA

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