The Bank of Thailand is increasing scrutiny of capital inflows from non-residents as part of its strategy to regulate the baht’s fluctuations. Starting Monday, Thai banks will be required to report any non-resident capital inflows exceeding $200,000, according to Bank of Thailand Governor Vitai Ratanakorn.
“This is the first time we are verifying the purposes and documentation behind such inflows,” he explained.
In addition to this, banks will need to report gold trading transactions conducted through digital platforms on both daily and per-transaction bases.
Mr. Vitai emphasized that these new measures aim to enhance the central bank’s ability to monitor and manage currency movements more effectively, especially since the baht has appreciated rapidly against the US dollar in recent months. The currency has gained 4.2% against the dollar in the past month alone, outperforming regional currencies such as the Malaysian ringgit (1.7%), Singapore dollar (1.4%), and Chinese yuan (1%). Year-to-date, the baht has strengthened by 9.4% against the US dollar.
Currently trading at around 31.03 to the dollar, many analysts believe the baht may test the 30-level soon.
Mr. Vitai pointed out that several factors, beyond economic fundamentals, have contributed to the baht’s appreciation, including increased gold speculation driven by rising global gold prices. To better gauge these impacts, the central bank is collaborating with the Ministry of Finance and relevant agencies.
Online gold trading now constitutes 40-50% of all foreign exchange transactions, hitting a peak of 60% in August. Consequently, tighter regulations on gold-related currency transactions are being considered, and discussions are ongoing among the central bank, finance ministry, and Securities and Exchange Commission about possibly imposing a special business tax on online gold trading, subject to assessment by the Revenue Department.
Mr. Vitai acknowledged that the central bank has actively intervened to reduce volatility in the baht, although such efforts can only mitigate fluctuations and do not aim to target a specific exchange rate. “We want to reduce volatility and prevent the baht from strengthening to a level that could hurt exporters and the economy,” he said.
He also clarified that the central bank cannot set a specific target for the baht or manipulate its value due to international agreements.