There was no other choice: Thanong

 "The (Bank of Thailand) governor suggested the managed float system. In the morning of June 29, 1997, we had a meeting with the prime minister to finalise the situation, ahead of a televised programme. On that day, the PM was not told if the baht would be floated. He was just told that we were looking into solutions and did not know when to take action," he said in an interview to Krungthep Turakij. "He was advised to tell the public that a study on the foreign exchange system is underway. No country made an announcement on a change in the system. As such, it's not that we're lying to the public."
 On TV, Chavalit assured the public of the strength of financial institutions, following deposit runs. He also assured the public that the foreign exchange rate system would not be changed.
 Thanong was officially appointed to the post on June 21, 1997, to replace Amnuay Viravan. He was personally approached by then Prime Minister Chavalit Yongchaiyudh, after failure to find replacement for Amnuay when the baht was under heavy attack. Thanong was former chief of Thai Military Bank, now TMB Bank, which oversaw the Royal Thai Army's savings.
 He said that economic indicators at the time forced him to float the baht. There was no other solution, he added.
 After the meeting with Chavalit, the Finance Ministry and Bank of Thailand reached a solution. The ministry wanted to float the baht on June 30, but the Bank of Thailand suggested a delay to the next six months to avoid exacerbating the financial strengths of financial institutions. Then, the situation was expected to improve.
 Thanong recalled that on the next day, July 1, after he finished the meeting with other ministers, he had a consultation with then BOT governor Rerngchai Marakanond and his deputy Siri Garnjaroendee. On the same day, he sought a meeting with Chavalit, to get his endorsement in writing.
  The former finance minister said that the situation offered no other option, due to excessive outflows. "We couldn't move forward, given over US$100 billion in foreign borrowing" when the foreign reserves shrunk to only $25 billion. Of total, only $1 billion could be used to defend the baht, as the rest was used to back note printing. On top of that, the Bank of Thailand incurred swap contracts worth over $30 billion. In effect, Thailand's reserves were in negative level. Floating the baht and letting it to weaken, to assure the world of Thailand's debt repayment ability, was the only option. It was proved right, as three years later Thailand built up reserves to the tune of $30-$40 billion.
 "Aside from wider trading band and managed float, another option then was a debt moratorium like in Latin America. Yet, debt moratorium would lead to asset freezes by creditors," Thanong said.
 "Was I worried then? No. I was just worried for my family. But eventually, there was no much bombardment. Then, I tried to convince the public that we adopted the right solution and all Thais must move on. I was asked why we didn't follow the Malaysian solution. It was a different case. Then, (Malaysia's prime minister) Mahathir dispatched someone to talk to (George) Soros, for some settlements. Thailand could not do that, or we would be branded as a conspirator."
 Thanong said that on June 25, he was approached for a discussion by someone in Soros's team. He refused. "I didn't know what to say."
 "I could say that only the central bank governor and me knew when the baht would be floated. Other Cabinet members could just guess. In May, some Thai businessmen were believed to have conspired with Soros's baht speculation scheme."
 Asked if Thaksin Shinawatra knew in advance on the devaluation, as Shin Group was slightly affected by the baht devaluation, he said the group had natural foreign exchange hedging. While mobile handset distribution business generated forex losses of Bt2-Bt3 billion per year then, the group required payments in dollar from clients of its satellite business. The dollar revenue then was used to repay for satellite equipment, purchased in dollar. Meanwhile, Shin Group's debt-to-equity ratio was less than 1:1, against 4:1 in many businesses. As such, many other businesses witnessed a sharp spike in debt burden after the devaluation.