Bangkok: The Bank of Thailand (BOT) is reducing pressure on the baht’s strength, proposing to the Ministry of Finance to increase the foreign capital inflow limit and tighten gold control. The BOT is addressing the volatility of the baht and has proposed to the Ministry of Finance to increase the foreign capital inflow limit to 10 million US dollars, expected to be enforced by the end of this year. Financial institutions are being instructed to strictly enforce gold transactions and major gold traders to report their transactions.

According to Thai News Agency, Ms. Pimphan Charoenkhwan, Assistant Governor for the Financial Markets Operations Department of the BOT, revealed that the baht appreciated approximately 1% last week, primarily due to a weakening dollar, in line with the US Federal Reserve’s revised monetary policy outlook. Furthermore, the baht has faced additional pressure from foreign exchange sales by exporters, capital inflows into the bond market, and foreign exchange sales by gold companies, following a faster-than-4% increase in gold prices.

The BOT is taking the following additional actions: proposing that the Ministry of Finance revise the criteria to increase the limit on foreign income that cannot be repatriated to US$10 million per transaction, up from a maximum of US$1 million per transaction, which is expected to take effect later this year. This measure aims to increase flexibility for the private sector in managing foreign currency and reduce pressure on the baht’s appreciation.

Additionally, the BOT plans to adjust practices and urge financial institutions to increase strictness before accepting foreign currency transactions related to gold. It also proposes that the Ministry of Finance consider requiring major gold traders to report relevant transaction data to enhance efficiency in tracking transactions and assessing the impact on the baht, as well as to establish relevant policies as necessary and appropriate.

Going forward, the financial market remains highly uncertain. The Bank of Thailand will continue to closely monitor the baht’s movements and is prepared to manage currency fluctuations to minimize impacts on the business sector.