Bangkok: The Governor of the Bank of Thailand has expressed concern over the rapid appreciation of the baht and has ordered stricter scrutiny of dollar-denominated transactions. The rapid rise in the baht’s value has prompted immediate action from the country’s central bank to manage the exchange rate and address the factors contributing to this financial shift.

According to Thai News Agency, Mr. Witai Rattanaporn, Governor of the Bank of Thailand (BOT), disclosed that the baht has appreciated by 2.5% since the beginning of December. This appreciation is mainly attributed to the weakening of the US dollar, as well as Thai-specific factors such as seasonal capital inflows from tourism and exports, along with investments in stocks and bonds. Additionally, there has been a notable increase in transactions by gold traders, contributing significantly to the currency’s appreciation.

In response, the BOT has implemented measures to manage the baht’s exchange rate and tighten controls on transactions involving the sale of US dollars to purchase baht by gold businesses. The central bank has instructed commercial banks to carefully scrutinize documents related to foreign currency sales for baht by gold businesses. Furthermore, the BOT is seeking a Ministry of Finance announcement to grant it the authority to request information on foreign currency trading from major gold traders.

The BOT is also increasing regulations on transactions involving the sale of US dollars to purchase baht. Foreign currency trading by gold businesses, at times accounting for as much as 20% of all foreign currency trading, has significantly impacted baht volatility. Discussions with the Ministry of Finance are underway to designate an appropriate agency to regulate the gold business, especially online gold trading platforms with larger transaction volumes, which have led to substantial fluctuations in the baht.