BoT targets inflows and gold app trading as baht surge bites
BoT now requires purpose and document checks for FX inflows over US$200,000, shifting focus to inflows and gold app trading blamed for baht strength
- The Bank of Thailand (BoT) has issued a notification requiring individuals and legal entities bringing more than US$200,000 into Thailand to state the purpose and provide supporting documents, as part of efforts to address baht appreciation.
- The move marks a shift from monitoring capital outflows to tightening control of capital inflows, which the BoT says are a key driver of the baht’s strength.
- The BoT also said gold trading via apps is another major factor pushing the baht higher, and it plans to work with the Finance Ministry on new oversight rules.
Vitai Ratanakorn, Governor of the Bank of Thailand, said the BoT has signed a notification on operating procedures for foreign-exchange transactions with customers. Under the new rule, individuals and legal entities bringing foreign currency into Thailand must report the purpose and present supporting evidence if the amount exceeds US$200,000. The rule takes effect immediately.
“This measure is a significant adjustment. Since 1997, we have focused on monitoring outflows. But the context has changed, and inflows are now a major factor behind the baht’s strength,” he said. He added that small transactions, remittances by people working abroad, and normal trade flows with clear documentation will not be affected.
Vitai said the baht is currently being influenced by three key factors:
- Fundamentals, such as a weaker US dollar and a trade balance or current-account balance that is more positive than expected.
- Capital flows, including investment in equities and bonds.
- Central bank intervention—which the BoT can use only to reduce volatility, not to set direction or “reverse” the exchange rate, due to an agreement signed with the U.S. government about 10 years ago.
“If we were to buy or sell dollars to reverse the price trend or to peg the rate, we cannot do that. But we can reduce volatility. In the second half of the year, we have done this very intensively,” he said.
On capital flows, he said the main issue is funds entering Thailand for investment. The BoT does not see clear signs of the type of currency speculation seen in the past, but it has seen inflows into long-term bonds. Overall, the BoT cannot block such inflows—for example through tax measures—because it would immediately affect the capital market. What it can do, he said, is improve the rules for bringing foreign currency into Thailand."
Vitai said the BoT had also examined whether the baht’s appreciation was linked to gold. Over the past three to four months, the BoT had discussed gold imports and exports, but deeper analysis found that transactions linked to gold sales through mobile applications were having a strong impact on the exchange rate.
He explained the mechanism: when investors sell gold for baht via an app, gold shops then sell the gold overseas to hedge their position (square position), receiving US dollars. When those dollars are then sold to buy baht back, it creates additional pressure for the baht to appreciate.
“During the periods when the baht strengthened sharply, dollar selling driven by gold transactions accounted for as much as 40–60% of total dollar selling across the country,” he said, adding that this type of speculation does not benefit GDP or overall economic growth.
Vitai said gold trading is the only business that currently has no clear oversight. The BoT has asked the Finance Ministry to identify a lead regulator, and the BoT is coordinating with the ministry to obtain authority to amend Finance Ministry notifications to regulate gold trading transactions that affect the exchange rate.
He said the amendments are expected to be completed in the first or second week of next year, with clearer regulatory oversight expected in the third to fourth week of January 2026.
However, the BoT stressed that the control measures will focus on high-volume gold traders who trade hundreds of millions of baht and execute multiple rounds of trades per day. The BoT has asked around five to 15 major app providers to adjust their practices and prevent excessive speculation, and said the providers have agreed to cooperate. It insisted the measures will not affect ordinary retail gold purchases at gold shops or small-scale gold savings.
Asked whether these measures would prevent the baht from strengthening beyond 30 per US dollar, Vitai said he could not set a numeric target. The main goal is to reduce volatility and prevent distortive transactions that harm exporters and the economy in the long term. He added that this is a structural issue that will take time and require cooperation among multiple agencies.
