BOT governor orders tighter control of currency exchange after baht strengthens
Bank of Thailand Governor Vitai Ratanakorn says the BOT is stepping up scrutiny of foreign-exchange transactions — especially gold traders selling US dollars for baht — after the currency strengthened 2.5% since early December amid a weaker dollar and year-end inflows.
Bank of Thailand Governor Vitai Ratanakorn said the central bank is monitoring the strengthening baht and has ordered tighter controls on currency-exchange transactions by gold traders and foreign-exchange dealers.
Vitai said the baht has appreciated by 2.5% since early December, mainly because of a weakening US dollar.
He said the baht has also strengthened due to domestic factors, with more foreign currency flowing into the country during the year-end period from tourism and exports, as well as inflows into the bond and stock markets.
In addition, he said the baht has been affected by gold traders selling US dollars to buy baht in significant volumes.
“The BOT has therefore stepped in to manage the baht and tighten scrutiny of transactions in which gold businesses sell US dollars to buy baht,” Vitai said.
“The BOT has instructed commercial banks to strictly verify documentation for foreign-exchange sales used to purchase baht by gold businesses, and is seeking a Finance Ministry notification to grant the BOT authority to request information related to foreign-exchange trading from major gold dealers. The BOT also plans to further tighten oversight of transactions involving the sale of US dollars to buy baht.”
He said that in some periods, gold traders’ dollar sales accounted for about 20% of overall foreign-exchange transactions, meaning their activity can affect baht volatility.
He added that the BOT has discussed with the Finance Ministry the possibility of designating a government agency to oversee gold trading, particularly online trading, where transaction volumes have increased and are having a clearer impact on baht volatility.
In addition, the BOT will inspect transactions involving the sale of foreign currency to buy baht to prevent undesirable inflows or funds unrelated to normal business operations, as well as personal remittances. Commercial banks will be instructed to closely scrutinise foreign-currency inflows, the governor said.
