Thailand Tightens Controls on Gold Trading to Combat Excessive Baht Strength

 

Finance minister signs order empowering central bank to monitor transactions as overvalued currency threatens export competitiveness.

 

 

Thailand's finance minister has signed a sweeping order granting the central bank new powers to monitor gold trading transactions, as authorities intensify efforts to curb excessive baht appreciation threatening the nation's economic recovery.

 

Deputy Prime Minister and Finance Minister Ekniti Nitithanprapas announced the regulatory amendment on Thursday at the CEO Day event organised by Krungthep Turakij, revealing a comprehensive strategy to address currency volatility that officials warn could trap Thailand's already sluggish economy.

 

The amended Ministry of Finance regulation empowers the Bank of Thailand governor to invoke authority under the Exchange Control Act, requiring gold shops to report transactions to the central bank. 

 

The measure specifically targets gold trading through mobile applications, which authorities believe is directly impacting the baht's exchange rate.

 

"We are discussing every possible avenue, using both monetary and fiscal tools to manage the baht. An excessively strong baht will further damage the Thai economy," Ekniti said during his presentation on fiscal and financial strategies for economic revival.

 

Thailand currently faces what the finance minister described as excessive baht strength beyond fundamental factors, severely impacting the export sector and national competitiveness. 
 

 

The currency appreciation stems from multiple sources, including a current account surplus, external factors such as United States policy implementation, and unusual gold-related transactions.
 

 

 

 

 

These currency pressures compound Thailand's economic challenges, with growth languishing at just 1.5 to 2 per cent—well below the potential rate of 2.7 per cent that economists believe the country should achieve.

 

Beyond gold trading oversight, Ekniti has established and chairs the "Connect the Dots" task force, linking data between the Bank of Thailand, the Securities and Exchange Commission, the Anti-Money Laundering Office, and the Thai Bankers' Association. 

 

The initiative aims to close legal loopholes, particularly in digital asset supervision, which criminals and hackers frequently exploit to move illicit funds—indirectly affecting the baht's value.

 

The taskforce has created a Data Bureau to integrate all financial information, enabling authorities to immediately identify suspicious money trails rather than operating in isolation as in the past. 

 

Officials acknowledge that illicit funds, or "grey money," contribute to baht volatility, with criminals potentially converting dollars to baht for money laundering through property purchases, luxury vehicles, or gold acquisitions.

 

 

 

 

 

Bank of Thailand Governor Vitai Ratanakorn, speaking alongside Ekniti at the same event, emphasised heightened scrutiny of high-volume cash exchanges due to risks of irregular transactions and grey money. 

 

He instructed commercial banks to report unusually large currency exchange transactions to the central bank on a daily basis for further money trail investigations.

 

"What we're implementing is limiting the volume of cash withdrawals or exchanges to prevent excessive cash transactions," Vitai said, highlighting the central bank's mission to encourage a shift from banknote usage towards digital money transfers through the financial system.

 

The governor requested cooperation from banks to closely manage and monitor large-scale cash withdrawals, with mandatory daily reporting to the Bank of Thailand for high-volume cash exchange transactions to enable continuous financial trail monitoring.

 

The dual announcement signals Thailand's determination to deploy regulatory intervention to stabilise its currency and protect economic growth, as policymakers confront what they characterise as fundamental threats to the nation's export-driven recovery.