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Speculate and be damned

Rather than demonizing George Soros as the prime mover of the run on their currencies, Asian central bankers need to ask themselves hard questions. Why did the hedge funds go on the attack, and who provided the funding? Do they realize what banks are up to, have they decided which of these activities are legitimate, and are there any effective means of restraint? Laura Covill reports.

The battle of the baht

It is political dissidents and rioters that most often fall foul of Indonesia's anti-subversion law. But following heavy selling of the rupiah last month, fund managers could face the ultimate penalty under the same legislation.

After the run on the currency that forced it to float free of its US dollar peg, Indonesian justice minister Oetojo Oesman warned that currency speculators could face subversion charges. "If this practice adversely affects the country's economy, it can be categorized as a subversive offence," he said. He stressed that the anti-subversion law is still valid. The maximum penalty is death.

Indonesia's government is not the only one in the region to react emotionally to "speculators" - the new public enemy. The Thai government has threatened to set the local mafia on George Soros, mastermind of the Tiger and Quantum hedge funds, should he make the mistake of spending even one night in Bangkok. Soros has also been named by Mahathir Mohamad, the prime minister of Malaysia, who accuses him of trying to impoverish already poor countries.

That may be one result of Soros's activities, but it can hardly be his motive.

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