London, December 20:

The Thai authorities were forced into a rapid and humiliating U-turn yesterday after the introduction of tough controls on taking money out of the country prompted the biggest sell-off on the stock market in the country and prompted fears of a return of the Asian financial crisis of a decade ago.

The Bank of Thailand had announced on Monday that people who invested more than $20,000 in the country would face severe penalties if they removed the money within a year. The move was designed to halt the rise in the Thai baht which was hurting the country’s exports. But a wave of selling followed, which knocked 15 per cent off the value of shares in a single session and led to an instant, if only partial, climbdown.

The government bowed to pressure from the financial markets by saying it would lift controls on foreign investment in shares, although restricti-ons on bonds and government paper remained in force. With the 10th anniversary of the first baht crisis looming, the panic selling in Bangkok qui-ckly spread not only to other bourses in Asia but also to African and Latin American economies.