Baht hits 31.15 per US$, strongest in over four years
Analysts say record-high gold prices and gold-trading flows have driven the baht’s sharp December rise, while the Bank of Thailand (BOT) has begun tightening reporting and oversight of gold transactions to curb exchange-rate volatility.
- The Thai baht strengthened to 31.15 per US dollar, its highest value in more than four years, making it the region's best-performing currency in recent weeks.
- The rapid appreciation is primarily attributed to record-high global gold prices and related trading flows, not Thailand's underlying economic fundamentals or significant capital inflows.
- Analysts suggest the Bank of Thailand may intervene to manage volatility, and the central bank has already met with gold traders to discuss new reporting requirements.
The baht strengthened throughout December and surged further in the past one to two weeks, touching 31.15 per US$ on Monday (December 22), its strongest level in more than four and a half years.
KResearch (KASIKORN Research Centre) said the rally extended last week’s gains, with the baht up about 0.9% from 31.46 per US$ on December 19.
Since end-November, it has risen 3.0%, making it the region’s best-performing currency over the period, firming from 32.20 per US$.
Kanchana Chokpaisalsilp, a research executive at KResearch, said the pace of appreciation has been unusually fast, reflecting heightened market volatility.
She attributed the move mainly to record global gold prices, with gold-related trading flows supporting the baht even though Thailand’s underlying economic fundamentals do not, in her view, justify gains of this magnitude.
She added that the baht has also benefited from broader Asian currency strength, including a rebound in the Japanese yen after verbal warnings from Japanese authorities.
Kanchana said the breach of key technical levels around 31.40–31.30 baht may have reinforced expectations for further gains, though she warned the baht may be near the limit of what fundamentals can support.
Wachirawat Banchuen, senior strategist at SCB FM (SCB Financial Markets), said the baht’s rise has been rapid and stands out against regional peers, driven largely by gold’s latest new high amid intensifying geopolitical risks and stronger demand for safe-haven assets.
He said the baht’s strength does not appear to be driven by capital inflows or speculative positioning, citing a lack of short-term bond buying and signs of slight outflows.
Wachirawat said authorities may need to take a more active role in smoothing volatility, including possible BOT dollar purchases to slow the baht’s rise, while noting that thin year-end liquidity could be amplifying moves.
He said measures on gold transactions remain at an early stage, focused on enhanced reporting and monitoring, and suggested stronger communication, similar to the BoJ (Bank of Japan)’s verbal intervention, could help.
SCB FM expects the baht to trade in a 31.0–31.5 per US$ range in the near term, with a break below 31.0 requiring a much sharper gold surge and a weaker dollar than currently assumed.
Wachirawat said appreciation pressure could ease early next year as seasonal patterns shift, although he does not expect the baht to return to 32–33 quickly.
The BOT met with 14 major online gold import-export operators to discuss reporting requirements under a new policy aimed at improving oversight of gold-related transactions and their impact on the exchange rate on Monday.
BOT spokesperson Chayawadee Chaianant said the Gold Traders Association would review the rules and provide feedback within the week.
Gold prices climbed above US$4,400 per ounce for the first time on Monday, with spot gold at US$4,413.01 late afternoon Thailand time and US February futures at US$4,442.40.
Gold is up nearly 68% this year and is on track for its strongest annual rise since 1979.
Separately, Vitai Ratanakorn, the BOT governor, said Thailand’s inflation target for 2026 will remain at 1–3%, unchanged from 2025, with inflation expected to gradually rise next year despite risks from oil-price volatility.
