In October 1963, the Thailand floating exchange rate was abolished and the Thai Baht was linked to the US Dollar at a rate of 20.08 per dollar, and through to 1971 the devaluation of the US Dollar led to a devaluation of the Thai Baht.
Therefore in 1972 The Bank of Thailand introduced a 4.5 per cent fluctuation band so that the Baht could move up or down against the dollar in a limited manner.
Then in 1978 this link to the dollar was broken and the external value of the baht was determined using a basket of currencies from Thailand’s major trading partners.
In 1984 the Thai Baht had its biggest change in history; the basket of currencies that were setting its value was increased to include the UK pound, the Singapore dollar and the Malaysian ringgit (among others).
Due to this change it was devalued from 23 baht to the dollar to 27.15 per US dollar. This in itself was a large (14.8 per cent) devaluation.
In 1991 another major change was made which allowed authorised persons and companies to deal in foreign exchange operations where prior to this date only authorised banks were allowed to do so.
We now had almost a free trading of currency.

Mr Soros
Then in 1997 a very wealthy money trader almost single handedly manipulated some of the Asian currencies with the Thai Baht being one of them. He borrowed fantastic amounts of Thai baht from banks worldwide (estimate to be more than 1 Billion baht) and then he bought dollars with these baht at 24.70 to the dollar. Then with some clever publicity he created the idea that the Thai baht was going to devaluate so the Thai people and other holders of the baht started to sell them.
The only buyer of these baht was the Thai Government which soon ran out of foreign reserves. So with the demand for foreign currency still going up the Thai Government was forced to give up the fixed exchange rate. The rate immediately went up to 29.45 when our clever money trader sold his dollars back to Thai baht and repaid his loans making an absolute fortune in the process.
Since this time the Baht has been allowed to float freely with only minor intervention. As can be seen from the graph on the facing page the period from 1998 to 2000 was a fantastic time to move money from US (and other countries) into Thailand.
This major move in exchange rates made a huge difference to the buying power of foreigners and it also coincided with the fact that the majority of large developers had been borrowing in US Dollars for assets in Thai Baht.
This immediately put a lot of developers out of business and the Thai Banks came under huge pressure for Non Performing loans (NPLs).
Those developers who were able to complete their projects were struggling with sales due to a credit crunch never before witnessed in Thailand. Even today you can hear Thai’s talk of the bad days of IMF when the International Monetary Fund put strict controls on Thai Banks in order to provide the necessary funding to keep them afloat.
The Thai Government’s solution to help out the slumping Thai property market was to open up the market to a previously ignored one ... The Foreigners!
This created an immediate influx of buyers once the Thai government made it legal for a foreigner to own a condominium in his own name. There were a few restrictions of course, but with the foreign currencies in 1998 running at all-time highs against the Thai Baht, condos were immediately affordable and the buying boom began. Almost immediately condos were springing up all over Pattaya and most of them were targeted at foreign buyers.
By the year 2000 the skyline of Jomtien and Wongamat had been changed forever.

Enter the big boys
During this same period some of the world’s largest companies were starting to see the benefits of having an Asian manufacturing base and the earlier work done by the industrial estate developers was starting to pay off.
With the introduction of General Motors, Auto Alliance (Ford Mazda), BMW, Seagate, Mitsubishi, Triumph and many, many others there was an out of control demand for quality housing for the middle and senior management and, of course, an even bigger demand for accommodation to house the hundreds of thousands of workers needed to work in these factories.
This was the beginning of the other part of the Pattaya development boom, the housing estates ... more of that at another time. Ω