The Bank of Thailand has pledged to take measures to curb excessive fluctuations in the baht and reduce the impact of gold price movements, following the currency’s surge to its highest level since June 2021.
On Tuesday, the baht appreciated to its strongest point in over three years, gaining approximately 8% this year. The sharp rise poses a challenge for Thailand’s trade-dependent economy, especially as it faces the repercussions of a 19% US tariff on exports. Additionally, the currency’s strength makes Thailand less attractive to foreign tourists, a crucial revenue source for the nation.
The BoT explained that the recent appreciation was primarily driven by a weaker US dollar and rising gold prices. The central bank’s commitment to manage currency volatility aligns with previous efforts to maintain an orderly foreign exchange market.
“Thailand’s central bank continues to actively monitor baht movements and is prepared to intervene to reduce volatility, thereby protecting businesses from adverse impacts,” Assistant Governor Pimpan Charoenkwan stated on Monday. She also indicated that the BoT is considering measures to limit gold price impacts on the currency, though no specific details were provided.
BoT Deputy Governor Roong Mallikamas noted in July that discussions are ongoing between the central bank and the Finance Ministry to address currency movements that deviate from economic fundamentals, including the influence of gold prices. The BoT considers gold prices as a non-fundamental factor that can influence the baht’s fluctuations.
Generally, the baht tends to strengthen when Thais sell gold—highly valued as an investment—since the proceeds are converted into local currency. The link between gold prices and the baht remains notably closer than with other emerging Asian currencies.