Currency speculators will need to take several valium to calm their nerves between now and the 16th ­ during that time they will be scrambling for expensive baht to cover their short baht positions, government officials said.

So it comes as no surprise that for three trading days last week, speculators, many of whom were involved in the attack on the baht in mid-May, stepped into the stock market to trade stocks from their left pockets into their right pockets to take advantage of a loophole to ''launder" dollars for baht.

Currency speculators are thought to have lost about US$1 billion (Bt26 billion) in their attack on the baht when the Bank of Thailand played hard ball and shut down the foreign exchange swap market to create a two-tier baht system. Some of the foreign speculators are still reeling from the damage and are trying to unwind their short baht positions.

On the offshore market yesterday the baht was traded at Bt23.80 to Bt24.10 to the US dollar, compared with Bt25.775 on the onshore market. According to Vachiraphand Phromprasert, a CMIC Finance & Securities treasurer, the amount of baht available offshore has fallen to only Bt75 to Bt90 billion.

Since it is cheaper to buy the baht onshore than offshore, the speculators have used the half dozen ways open to them to bring the currency out of the country. Each time they have been blocked.

For three trading days ­ June 5, 6 and 9 ­ Thai officials were either unaware or too preoccupied to notice that the stock market was being used by investors to make significant profits by arbitraging the baht between the onshore and offshore markets.

Investors had found that the transaction and payment system at the stock market was so efficient that it was easy to take money out of the country. They simply brought dollars into the country and bought baht in the spot market. Then they used the baht to buy stocks in the morning only to sell them in the afternoon. The baht proceeds from stock selling would flow into their non-resident baht accounts, from which they could legally bring the local currency out of the country for lending at a profit of about Bt2 for every US dollar.

''It would be quite a big embarrassment if we did not do anything about the fact they were hitting us," said one official.

''If they see an opportunity in the markets to arbitrage, that is fine, because it is the nature of speculators to look for loopholes to make money. But if they wanted to get hold of the baht to unwind their baht positions, then wait a minute, it should not be that easy."

The regulators discussed their strategy on Monday evening before deciding to curb the transactions at the non-resident baht account level beginning the following day. The measures effectively halted the speculating.

It marked the latest of a patchwork series of measures to plug loopholes created by previous measures to prevent speculators from getting their hands on baht after they had resorted to every possible channel for taking baht out of the country.

Custodians have been asked by the authorities to add another accounting column to the current two columns, so that the holders of non-resident baht accounts can have their baht balance, dollar balance (in case they need to bring the money out of the country) and back to baht balance (in case they need to re-invest in the country).

The exchange controls have been met with criticism, for the impression is that Thailand is turning its back on its open-door policy. ''By imposing capital controls, Thailand has effectively shut out foreign capital. That means it must rely on reserves to finance its current account deficit," Credit Lyonnais warned.

''Such restrictions are always irksome to investors. In this case, by trying to seal off the domestic baht market from the offshore market, the immediate impact of the initial measures was to discourage capital inflows from those worried investors and to reduce liquidity at home. And by restricting what investors can do in the stock market, it effectively discourages money from going into equities as well," said the Far Eastern Economic Review's Shroff column.

The criticisms reflect the regulators' failure to rally public support to their cause. Indeed, Finance Minister Amnuay Viravan has said that all the forex controls in place are merely temporary to punish speculators and that they should not have an impact on normal transactions as the regulators are working on measures to rectify the macro-economic imbalances.

Critics of Thailand's policy have overlooked the more messy scenario in which the regulators failed to defend the currency from the attack. The daily $5 billion capital movements would have eventually undermined the system. Companies and factories would go bankrupt. Unemployment would skyrocket. Equity investment would be nearly wiped out. The chance of a quick recovery from the economic slump would disappear.