Baht breaks 31 per dollar; Bank of Thailand to curb app gold trades

The “baht” has again become a growing concern after strengthening rapidly.

Most recently, on Wednesday (January 21), the baht continued to appreciate and broke below the 31.00 level against the US dollar, reaching a strong level of THB30.88 per US dollar.

This marked its strongest level since March 2021, or the strongest in about 4 years and 10 months.

Meanwhile, the “Thai stock market” closed up 21.19 points at 1,317.56, or 1.63%, with trading value (volume) of THB68,148.65 million.

Vitai Ratanakorn, Governor of the Bank of Thailand (BOT), said the baht’s recent appreciation has been driven by two main factors: foreign capital inflows into both the “stock market” and “capital market”, and a sharp rise in gold prices to a “new high”, which triggered large-scale gold buying.

This is directly linked to foreign-exchange transactions.

However, from a fundamentals perspective, the baht has strengthened due to multiple elements, including pressure on the US dollar from geopolitical issues, interest-rate cuts by the US Federal Reserve (Fed), the trend towards reducing reliance on the dollar (de-dollarisation), and Thailand’s consistently strong current account surplus.

But Thailand differs from many countries because it has an “additional factor”, or an amplifier, that makes the baht strengthen more than elsewhere, especially in gold trading transactions.

Gold-trading flows account for as much as around 35% of total foreign-exchange transactions, meaning gold buying has become an additional force that significantly accelerates the baht’s appreciation.

“Some factors, such as fundamentals or the direction of the US dollar, are things the BOT cannot manage directly. But what can be done is to oversee transactions related to gold, which have quite a large impact on the baht.”

Therefore, the BOT’s approach will focus on online gold-trading transactions conducted in “baht” via applications.

It will not regulate gold trading at physical gold shops, nor gold trading via applications that use US dollars.

It will oversee only gold transactions settled in baht.

In the near term, the BOT is preparing to issue two notifications.

The first will require 15 business operators that trade gold in baht on online platforms to submit transaction reports to the BOT.

For example, in cases where trading exceeds THB20 million per transaction, the BOT has sufficient information to monitor the situation.

The second will be an official notification setting a cap on baht-denominated gold trading on online platforms.

The cap is being considered at around THB50–100 million per person per day.

Although this amount accounts for only about 1–1.5% of total gold-trading volume, it represents a high-value share and has a significant impact on the baht.

Setting such a cap will not affect people who already hold gold, retail investors, or general gold shops.

The BOT expects the notifications to be issued during Jan 23–29, 2026, and to take effect around March 2026, to allow operators and gold shops time to prepare.

It also acknowledged that the BOT’s action to manage the baht amounts to an intervention during a period of baht strength.

However, the impact of intervention now may be less than in the past, especially before 1997, because Thailand now has agreements and trade-cooperation frameworks with the United States and other countries on currency distortion (currency manipulation), which place greater limits on intervention.

“Many people misunderstand and think the BOT can fully control the exchange rate, when in reality, trading in dollars is determined by market mechanisms. The BOT will step in only when the baht strengthens or weakens abnormally. The BOT can see only around 40% of foreign-exchange transactions that are domestic, while the remaining roughly 60% are offshore transactions, which cannot be fully monitored.”