Shortly before Thailand's central bank unveiled draconian new capital controls, Pridiyathorn Devakula, the finance minister and former central bank governor, gloated that the country was poised to take "historic" measures against the speculators blamed for rapid appreciation of the baht.

After one painful day and a 15 per cent plunge in the stock market, Mr Pridiyathorn - edgy, worried and facing the wrath of Thai and foreign investors - was forced to declare the measures would not apply to portfolio investors, a dramatic and embarrassing reversal.