BANGKOK, THAILAND – Thailand’s central bank moved to curb a surging baht by tightening reporting rules on large foreign money transfers and scrutinising online gold trading.
New reporting rules for large inflows
Bank of Thailand governor Vitai Ratanakorn announced on Friday that a sharp policy reversal would take effect from Monday, 29 December. Under the new rule, Thai banks had to report all capital inflows from non-residents exceeding 200,000 US dollars (about 185,000 euros).
“This is the first time that we are reviewing the purpose and documentation of such inflows.”
said Vitai, adding that the goal was greater control.
Baht rally pressures exporters and tourism
The Thai baht had appreciated rapidly in recent months, gaining 4.2% against the US dollar in one month and 9.4% since the start of the year. This was the strongest rise among Asian currencies, making Thai exports more expensive and hurting the wider economy.
On Friday the baht traded at 31.03 per dollar, and analysts expected it to soon test the 30-baht mark, a scenario described as a nightmare for exporters and the tourism sector.
Online gold trading drives currency demand
A key driver of the strong baht was online gold trading, which in recent months accounted for 40–50% of all foreign exchange transactions. In August the share even reached 60%, as speculation in gold pushed up demand for baht.
Banks were therefore required to report gold-trading transactions conducted via digital platforms, enabling the central bank to obtain a clearer view of the market.
Special tax on gold trade under discussion
Authorities considered even tougher measures as the central bank, Finance Ministry and securities regulator discussed a possible special tax on online gold trading on Tuesday. The Finance Ministry was examining whether such a tax would be legally appropriate, which would act as a direct brake on speculative activity.
“Gold speculation has played a significant role in strengthening the baht.”
said Vitai, noting that the authorities were working on countermeasures.
Central bank interventions and limits
Vitai also acknowledged that the Bank of Thailand had already intervened heavily in the foreign exchange market to dampen baht volatility.
“Although we intervened strongly in the second half of the year, our efforts could only mitigate the fluctuations.”
said the governor.
He stressed that the bank sought to reduce volatility but would not target a specific exchange rate, as international agreements prohibit direct manipulation.
Implications for investors and the economy
For foreign investors, Thailand became more transparent but also stricter, ending an era in which millions could move in and out of the country largely unnoticed. For the domestic economy, the new regime was intended as a protective shield, giving the central bank time to slow the baht’s appreciation.
Whether these steps would be enough to safeguard exports remained unclear, but the struggle over the Thai currency had clearly entered a new, tougher phase.