Thai Industries Federation Urges Central Bank to Tackle 'Unnatural' Baht Strength and Money-Laundering Risk

 

The Federation of Thai Industries (FTI) has pressed the Bank of Thailand (BOT) to strengthen oversight of the country's gold and cryptocurrency transactions to prevent Thailand from becoming a hub for money laundering, while simultaneously addressing the severe impact of an 'unnaturally' strong Thai Baht.

 

Speaking on Tuesday after a meeting with BOT Governor Vitai Ratanakorn, FTI chairman Kriengkrai Theinnukul highlighted the urgent issue of the Baht's dramatic appreciation.

 

He noted that the Thai currency has strengthened by over 7% compared to its regional counterparts, contrasting sharply with the Vietnamese Dong, which has weakened by more than 3%.

 

"This creates a competitive gap of nearly 10%," Kriengkrai stated. "Thai export goods, which operate on thin margins, are at a clear disadvantage compared to our rivals. With export revenues accounting for over 60% of our GDP, this is a crisis."

 

The strong Baht is also battering the tourism sector, another key economic engine responsible for roughly 10% of GDP.

 

Tourists are reportedly becoming more cautious with their spending, dampening visitor numbers. In contrast, Vietnam's 3% currency weakening against the US dollar has attracted an estimated two to three million extra tourists.

 

“The Baht is too strong, leading to reduced national income and competitive disadvantage in the global market, which further impacts employment and the broader economy,” Kriengkrai warned.

 

The International Monetary Fund (IMF) projects Thailand’s 2026 GDP growth to be just 1.6%, with slowing exports and tourism cited as factors.

 

 

The Gold and Crypto Problem

The FTI chairman suggested that the baht's fluctuations are being exacerbated by "unnatural factors," specifically pointing to gold trading and cryptocurrency transactions, which may be linked to international money laundering.

 

The baht has shown a high correlation with the gold price.

 

The FTI flagged "abnormal" gold exports to Cambodia, which soared to 12,000 million baht in the whole of 2023, then skyrocketed to 71,000 million baht in just the first seven months of 2024.

 

The Federation has proposed that government agencies tighten scrutiny of these exports.

 

"When the private sector noted an abnormality in gold exports last month and checks were tightened, the baht rate eased somewhat. Strict control and regulation would certainly help with this," Kriengkrai said.

 

The FTI also noted that the move to price gold trade in US dollars is a positive step that should help curb the Baht's appreciation.

 

Furthermore, the FTI is concerned that uncontrolled cryptocurrency trading and 'grey capital' are destabilising the currency and are worried Thailand is becoming a money-laundering hub.

 

Controlling crypto and grey money flows is expected to help stabilise the baht.

 

 

BOT's Response and Further Proposals

BOT Governor Vitai acknowledged the concerns but explained the central bank's limitations, citing scrutiny from the United States regarding currency manipulation.

 

He assured the FTI that the central bank would review the disruptive factors raised.

 

Separately, the FTI put forward several proposals to the government, including increasing the proportion of 'Made in Thailand' products in public procurement from 30% to 50% to boost domestic industry and SME revenue without requiring extra budgets.

 

They also backed the government’s “Quick Big Win” policies, especially energy measures like reducing oil prices and promoting household solar energy, which they estimate could boost GDP by an additional 1%.

 

“All sectors must work together today; the government, private sector, and central bank must be one jigsaw piece. A baht level of 34–35 baht to the US dollar would greatly assist exporters and represent a balanced level for both economic stability and competitiveness,” Kriengkrai concluded.