Japan promised Thailand it would intervene in foreign exchange markets whenever necessary to help stabilize the baht, Finance Ministry officials said July 18.

The agreement came during an afternoon meeting between Finance Minister Hiroshi Mitsuzuka and his Thai counterpart, Thanong Bidaya, according to the officials. Mitsuzuka expressed support for the economic and financial policies the Thai government is currently implementing, adding that he believes Thai authorities will succeed in bringing the situation under control.

"Mitsuzuka and Thanong agreed to maintain close cooperation in the foreign exchange market whenever necessary in the interest of stabilizing the baht," one official said, adding that this included market intervention. Ministry officials also said the Thai side made no request for Japanese financial assistance to help manage the present currency instability.

In addition, Thanong clearly told Mitsuzuka that his government did not intend to ask the International Monetary Fund for financial aid, they said. Thanong is currently visiting Japan with other financial officials, including Bank of Thailand Gov. Rerngchai Marakanond, to explain the state of the Thai economy and his government's decision earlier this month to place the baht under a managed float system.

The move led to a decline in the value of other Southeast Asian currencies, such as the Philippine peso and the Malaysian ringgit, leading observers to say Japan might need to offer financial assistance to shore up the baht. Thanong told reporters after the meeting that the baht's move to a managed float was a move in the right direction.

"It takes some time (for the baht) to reach an equilibrium level, but it should not be too long," he said.