The International Monetary fund drew severe criticism for not preventing Mexico's 1995 financial collapse. A repeat in Thailand is a deja vu it hopes to avoid. With speculators beaten back, intervention is now Washington-corridor talk.
Specifics are hard to come by. Quite what the world's macro-economic policeman could do to ease Thailand's troubles is unclear. The country has no shortage of foreign exchange reserves and is only now running a fiscal deficit after nine years of surplus.
Problems exist, but not the type usually associated with IMF stabilisation programmes. Sticking with its pegged exchange rate system means high interest rates are a necessary discipline. So long as that stays few policy alternatives exist. So could the IMF be planning to join the defence of the baht? Last month Asian central banks assisted the Bank of Thailand (BOT) buying the currency against a tide of speculative short selling. The Bank of Japan is reckoned to have played a central - and continuing - role seeing the kind of strategic interest that the US felt in Mexico. Japanese banks are thought to have lent Thai companies and finance institutions up to US$50 billion.
Recently in Hong Kong, IMF chief Michael Camdessus said a Mexican situation would not be allowed to develop in Thailand. Indeed, with the joint IMF-World bank annual jamboree in Hong Kong only 10 weeks away a meltdown at the hands of speculators would be a disaster.
For now a stand-off exists with speculators holding huge short positions, largely through cross-currency swaps, left uncovered after the Bank of Thailand barred banks lending baht to foreign investors. By doing so the central bank is trying something quite unusual.
Maintaining a two-tier baht market seemingly offers a solid bet for those investors wanting to buy the currency and scoop a big interest rate carry on largely US dollar funded positions. Yet even true believers must wonder how long high interest rates can be sustained? Next week, current account and crucial bad bank debt data will be released. Equity prices have tumbled 60 per cent as the property and finance sectors fight high interest rates and a recession-induced collapse in demand.