The Bank of Thailand has urged the Ministry of Finance to tighten controls on gold trading, citing its influence on currency movements and the baht’s rise. Governor Vitai Ratanakorn indicated that further interest rate cuts may be possible to support the sluggish economy, with the rate currently at a three-year low of 1.25%.
The baht has appreciated 9.1% this year, driven partly by gold trading flows, which account for around half of the currency’s daily movements and can reach 50% of Thailand’s GDP through digital traders. The central bank warns that unregulated gold trading threatens the broader economy and calls for better regulation.
Despite opposition, the bank has no plans to tax gold transactions or capital flows but emphasizes managing volatility. Vitai also advocates adopting the FATF’s “travel rule” to enhance monitoring of cross-border money transfers.
While ready to lower rates further, the central bank’s room for maneuver is limited after five cuts since October 2024. It forecasts 2025 growth at 2.2%, with structural issues requiring targeted measures beyond monetary policy. Vitai also highlighted close coordination with the Finance Ministry, ensuring policy alignment.