Thailand will ease currency controls on foreign investment into the stockmarket, it said today, after earlier imposing restrictions that caused share prices to plunge 15%.

Finance Minister Pridiyathorn Devakula said that starting tomorrow,  foreign investment via the Stock Exchange of Thailand (SET) would be exempt from draconian measures introduced today to halt the soaring baht.

Under the new currency control measures announced yesterday and effective today, 30% of non-trade related foreign exchange sold for local baht currency must be deposited interest free with the central bank for a year.

The new currency control measures aimed to deter currency speculation and to prevent further rises in the value of the baht, which was damaging the country's export business.

The news sent Thai stocks to their lowest level in two years today, prompting dealers and the SET to ask the central bank to reconsider the new measures.

Pridiyathorn earlier said the Thai government would not reconsider the new rules, but he appears to have backed away from his  bullish stance as the full extent of the SET plunge became clear.

The Stock Exchange of Thailand fell 108 points, the biggest one day drop in the 31-year history of the  bourse, to close down nearly 15%.