BoT tightens checks on gold traders’ FX forwards to curb baht volatility

The Bank of Thailand (BoT) has ordered financial institutions to tighten oversight of foreign-currency forward transactions carried out by gold traders, as part of efforts to reduce volatility in the baht.

Pimpan Charoenkwan, assistant governor for financial markets at the BoT, said banks must now demand stronger documentation for every transaction involving gold shops that sell foreign currency forward. The central bank believes activity in this segment can amplify swings in the exchange rate.

Under the stricter approach, banks must verify evidence showing an actual gold sale to an overseas counterparty for each deal. They must also request supporting documents — including invoicing and export paperwork — within two business days after the gold trader delivers the foreign currency, to ensure the FX transaction is linked to a genuine gold export.

Separately, the BoT is collecting public feedback on proposed updates to foreign exchange control rules. One proposal would require large gold traders to report relevant transaction data to the central bank, to strengthen monitoring, assess impacts on the baht and support future policy decisions.

Baht edges higher as risk-off mood weakens dollar

The baht opened slightly stronger on Monday, December 15, 2025, at 31.55 per US$, nearly unchanged from last week’s close of 31.58, as markets moved into a risk-off stance.

Poon Panichpibool, a strategist at Krungthai GLOBAL MARKETS, said the modest move reflected a softer dollar and firmer gold prices as investors cut risk. However, the baht’s gains were limited after the US 10-year Treasury yield climbed towards 4.20%, supporting a rebound in the dollar and prompting gold to pull back.

He said the baht has lacked a clear direction since late Friday, trading in a 31.50–31.65 range, with occasional tests of the 31.50 support level when gold rose and the dollar weakened.

For this week, he expects the baht to trade between 31.00 and 32.00 per US$, with a daily range of 31.45–31.65.

Looking ahead to the rest of 2025 and into the first quarter of 2026, Krungthai GLOBAL MARKETS still sees a gradual “sideways down” trend, supported by fundamentals such as the tourism high season. In the near term, however, gains could slow as traders await key central bank meetings — including the Bank of Thailand, the Bank of England, the European Central Bank and the Bank of Japan — as well as major US economic releases, notably jobs data and inflation.

He added that the dollar remains exposed to two-way risks as expectations for the Federal Reserve’s rate path shift with incoming data, while BOJ signals could also move markets through the yen.

In Thailand, the key focus this week is the Monetary Policy Committee meeting, with Krungthai GLOBAL MARKETS expecting a possible 25-basis-point cut to 1.25% to help support growth and ease debt burdens, though future cuts could depend on how the outlook evolves.