Baht convergence limited
Trading in USD/THB moved onshore last Monday (March 3), when the Bank of Thailand lifted its unremunerated reserve requirement (URR). The URR was introduced in December 2006 to help curb inflows of hot money and a surging baht by requiring 30% of non-residents' gross local bond holdings to earn 0% interest for one year.
This led to a two-tier market, as the offshore market was unable to access onshore liquidity. At times this caused offshore and onshore rates to diverge as much as 10%. However
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