Consensus is growing in Bangkok that the Bank of Thailand (BOT) is almost certain to opt for currency reform rather than a devaluation of the baht. Analysts and financial economists say the central bank is likely to shake up the basket of currencies against which the baht is pegged. It could also widen its trading band but not devalue the baht in the short term. However, reform might not happen for another couple of months. Barclays BZW foreign exchange economist Desmond Supple said: 'The risks of a devaluation remain very slight, though further down the line the BOT is likely to broaden the bands.' It is widely believed the BOT is set on wiping out remaining speculators first before implementing any currency reforms, in case they leave the baht vulnerable to another attack. This could mean waiting until after mid-August, when international currency king George Soros is rumoured to still have US$4 billion worth of three-month forward positions due to mature. Deutsche Morgan Grenfell foreign exchange managing director Therapong Monthienvichienchal said: 'Right now there is a stand-off position between the central bank and speculators. 'This is likely to last a while, at least until the majority of forward positions are taken out. It looks like the central bank is determined to take on the speculators first, then take on the reform.' Mr Soros, president of Soros Fund Management and chief investment officer of the US$12 billion Quantum Fund, is being blamed by the BOT as the main culprit behind May's attack on the baht and is being billed in Thai newspapers as the 'number one threat to the stability of the nation's currency'. The BOT, aided by other central banks in the region, managed to see off the May attack by starving speculators of access to baht off-shore by banning Thai banks and foreign bank branches in Bangkok from supplying the currency to their off-shore trading partners. The shutdown of the foreign exchange swap market has made the baht more costly off-shore and made liquidity exceptionally thin. The BOT is hoping to burn Mr Soros when he tries to unload these positions and extract sweet some revenge. 'That will be very interesting to watch,' Mr Therapong said. 'The central bank has complete control over the game. It is the only one that can operate both on-shore and off-shore.' The BOT has breathing space to draw up some reforms - not just for the baht but also for the economy and financial sector. Asia Equity (Thailand) executive director Rob Collins said: 'There is time left.' However, he warned that if the government has not been able to shore up the baht within two months, market forces might take over and force the BOT's hand into a free float or unwanted devaluation. Analysts say the BOT should change the weighting of the basket of currencies the baht is pegged against away from the United States dollar, which comprises 80 per cent of the basket. Instead, it should increase the weighting in currencies of some of Thailand's primary trading partners, such as Singapore, Malaysia and Japan, to better match its trade flows. The effect of the recent strong US dollar on the baht has put pressure on the country's whole economy. As well as shaking up the basket and possibly widening the baht's trading band, analysts say the government also needs to tighten its currency controls, which have probably been the most lax in Asia. Analysts say Thailand could adopt a system similar to Singapore - if you lend baht off-shore, you would have to get BOT permission. AMN-Amro HG Asia (Thailand) chief George Morgan said: 'I think devaluation of the baht is not actually needed. 'If they can't come up with these measures, then it's going to kill liquidity. The economy might bleed to death and force them to devalue the baht.' The Thai Government usually manages the economy through monetary means. Amnuay Viravan quit last week as finance minister due to political pressure from within the government's own six-party coalition after trying to use the fiscal tool of tax rises to his cost. Chat Pattana, the second largest party in the ruling six-party coalition government, rebuked the idea. Mr Therapong said: 'I don't think just monetary policy is enough. It can only work if you also implement fiscal policies and have all the political parties' support behind it.' Mr Amnuay's successor, Thanong Bidaya, is expected to be given a couple of months to perform before Chat Pattana might turn on him if he fouls up. The opposition has predicted Mr Thanong will survive a maximum three months. He is Thailand's fifth finance minister in little over a year. Thailand's finance ministry does not suffer from a lack of right ideas - just the political might to implement them. Irrespective of baht reform, Independent Strategy economist Bob McKee still believes Thailand will have to devalue in the end. 'It's just a question of whether it can be done in an orderly fashion or will it be forced upon them,' he said.