Vitai Ratanakorn, Governor of the Bank of Thailand (BOT), revealed that the BOT has discussed with the Ministry of Finance to enhance the supervision of gold shops and gold trading through applications.
The discussion came amid the discovery that gold trading in the form of paper trade conducted by only 3-4 major operators has a very high value, accounting for 50% of the country’s Gross Domestic Product (GDP), which significantly affects the Thai baht. Commercial banks have also been asked to tighten document verification and to strictly identify the sources of funds.
Regarding the significant appreciation of the Thai baht, BOT has been intervening daily. Currently, there are 2-3 main factors impacting the baht. Firstly, fundamental factors such as the US dollar depreciating by 10% this year, which has different effects on each country, and an unusually high current account surplus—although the surplus has slowed, it remains positive due to capital flows and trade balances, which are hard to control.
Another factor is the considerable inflow of foreign capital into the bond and stock markets, particularly in long-term bonds. Therefore, measures need to be implemented gradually. Meanwhile, the capital inflow has led to a correlation between the baht and gold, with the gold price having already risen by 5%.
Digital currencies (cryptocurrencies) are another issue requiring oversight. The Securities and Exchange Commission (SEC) has certain limitations in this area. What is necessary is the implementation of the so-called “Travel Rule,” which relies on legislation from the Anti-Money Laundering Office (AMLO) to trace the origin of cryptocurrencies (such as USDT) to distinguish between gray, legitimate, or illicit funds.
Vitai highlighted a crucial limitation, which is a decade-old agreement with the U.S. government. Furthermore, under the current Trump administration, the BOT cannot intervene in a way that could peg or redirect the exchange rate.
Despite the constraints, he emphasized the need for strict supervision of the gold sector, including immediate monitoring of all foreign exchange transactions related to gold. BOT continues to request expanded authority to manage these flows, but with funds entering through various routes, he stressed the necessity for collaboration among multiple regulatory agencies.
