Thailand eyes tougher gold-trade rules after baht swings

[BANGKOK] Thailand’s central bank plans to tighten reporting rules for gold transactions after rising bullion flows contributed to swings in the baht, prompting policymakers to seek better visibility into the market.

Governor Vitai Ratanakorn said the Bank of Thailand is revising rules to require more detailed reporting of gold trades, giving regulators better visibility into how cross-border settlements may be affecting the currency.

“Gold isn’t directly regulated in Thailand and it’s still being discussed who will be the regulator,” Vitai told reporters during a weekend trip to Chiang Mai, Thailand. “If exporters send gold to Cambodia and settle in cryptocurrencies – which I believe is true – we won’t see anything at all. So we need to move closer and see what we can do.”

Gold became a hot-button issue earlier this year after the Thai central bank identified it as one driver of the baht’s sharp gains despite sluggish economic growth. The currency hit a four-year high in September, hurting competitiveness in exports and tourism, which together account for about 70 per cent of Thailand’s gross domestic product.

Gold trades settled in baht often force shops to hedge in overseas markets and make foreign-exchange transactions, adding to volatility. But the bank currently only sees trades routed through domestic banks, not those conducted directly with offshore markets, via affiliates or through crypto channels, Vitai said.

The central bank’s push is part of a broader effort by the Bank of Thailand to be more hands-on and connected to the real economy. The governor said that the bank will rely on more targeted measures to tackle structural imbalances rather than broad monetary tools.

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Earlier this month, the central bank also announced plans to tighten scrutiny of financial intermediaries and step up oversight of suspicious money flows as part of a wider crackdown on financial risks. BLOOMBERG