The Bank of Thailand (BOT) is set to implement stricter reporting requirements on gold transactions in response to increased bullion flows that have contributed to volatility in the baht. This move reflects policymakers’ efforts to gain clearer insight into how these transactions might be affecting the currency.
According to BOT Governor Vitai Ratanakorn, the revised regulations will call for more comprehensive reporting on gold trading activity. This will improve regulatory oversight, especially regarding cross-border settlements and their potential impact on the currency market.
During discussions with reporters in Chiang Mai, Mr. Vitai explained that gold trading is not currently under direct regulation in Thailand, and questions remain about which entity should serve as the primary regulator.
He noted particular concern about scenarios where exporters might send gold to foreign countries, like Cambodia, and settle transactions in cryptocurrencies, which would leave regulators with no visibility into such activities, underscoring the need for closer scrutiny.
Earlier in the year, gold transactions surfaced as a significant issue after the central bank identified them as a factor behind notable gains in the baht, even as the broader economy showed limited growth. In September, the baht climbed to a four-year high, placing pressure on Thailand’s export and tourism sectors, which together represent about 70% of the nation’s GDP.
Gold transactions that are settled in baht often require dealers to hedge their positions in foreign markets and make corresponding foreign exchange trades. The central bank currently only has visibility over trades conducted through local banks, not those settled directly with overseas markets, through affiliates, or involving cryptocurrencies.
The initiative to boost oversight of gold activities is part of the Bank of Thailand’s broader strategy to take a more active role in addressing developments in the real economy. The governor also pointed out that the central bank will adopt more selective policy tools aimed at addressing structural imbalances, rather than relying solely on wide-ranging monetary interventions.
In addition, the BOT recently outlined plans to increase scrutiny of financial intermediaries and to monitor suspicious money flows more closely as part of comprehensive efforts to control financial system risks.
