Thai central bank proposes new foreign-exchange rules to ease pressure on baht

The Bank of Thailand (BOT) plans to roll out additional measures to ease appreciation pressure on the baht and tighten oversight of gold-related foreign-exchange transactions after the currency strengthened about 1 per cent over the past week.

The local currency’s gains were driven by a weaker US dollar and increased foreign exchange selling from exporters; bond inflows; and gold traders amid a more than 4 per cent jump in global bullion prices, Pimpan Charoenkwan, assistant governor for the central bank’s financial markets, said in a statement on Monday (Dec 1).

The central bank has proposed raising the limit on foreign income that companies can keep offshore. The change, expected to take effect by year-end, is aimed at giving firms more flexibility in managing foreign revenues while helping reduce upward pressure on the baht.

The Bank of Thailand is also tightening scrutiny of gold-related flows.

Financial institutions have been instructed to adopt stricter due-diligence procedures before processing such transactions, while the central bank has recommended that the Ministry of Finance require large gold traders to report transaction data to improve monitoring and assess the impact on the currency, she said in the statement.

“Financial markets remain highly uncertain, and the Bank of Thailand will continue to closely monitor baht movements and stand ready to manage excessive volatility to limit the impact on businesses,” Pimpan said. BLOOMBERG

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