Baht gains 1% on weaker dollar and rising gold prices, BOT moves to curb volatility

The Bank of Thailand (BOT) announced on Monday that it would introduce measures to ease pressure on the baht, which appreciated by one per cent last week following a weakening of the US dollar and rising gold prices.

Pimpan Charoenkwan, assistant governor for the Financial Markets Group at the BOT, said the baht strengthened mainly due to the depreciation of the US dollar amid expectations of the US Federal Reserve’s policy direction.

She added that the baht also faced upward pressure from exporters converting their foreign-currency earnings, inflows of foreign capital into the bond market, and the selling of foreign currencies by gold traders after gold prices surged by more than four per cent.

To maintain baht stability amid volatility that could affect the business sector, Pimpan said the BOT would take the following measures:

• The Finance Ministry will be asked to revise regulations to increase the ceiling for foreign income that does not need to be repatriated, from no more than US$1 million per transaction to US$10 million per transaction. The change is expected to take effect later this year to give the private sector greater flexibility in managing foreign currency and reduce appreciation pressure on the baht.
• Financial institutions will be instructed to tighten scrutiny before conducting foreign-exchange transactions related to gold.
• The Finance Ministry will also be asked to consider requiring major gold traders to report relevant transaction data to improve monitoring efficiency, assess impacts on the baht, and support the formulation of necessary policies.

Pimpan said the BOT expected the baht to remain volatile and would continue monitoring the currency closely to ensure it is prepared to mitigate impacts on Thai businesses.