Gold trading boom boosts Thai Baht, Bank of Thailand initiates regulatory response

FancyResearchLab · 2026-01-12T14:53:50+00:00

The Thai Baht recently broke through 31.089 against the US dollar, reaching a four-year high. The booming gold trading is the main reason. The Bank of Thailand and the Ministry of Finance plan to impose taxes on online gold trading and strengthen regulation to address the economic challenges caused by the appreciation. While appreciation is good, it may weaken export competitiveness, so a balance between the market and economic fundamentals is needed.

FancyResearchLab

2026-01-12 14:53:50

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The Thai Baht has recently experienced a fierce rally, with the USD/THB exchange rate breaking through 31.089, hitting a four-year high, and has been rising for five consecutive trading days. Behind this strong appreciation, the booming gold trading has become the main driving force.

Gold Trading Fever Sparks Currency Market, Policy Intervention Begins

Thailand’s central bank governor Vitai Ratanakorn explicitly stated, “The surge in gold trading activity is the core driver of the Baht’s significant appreciation.” When the public sells gold and exchanges the proceeds in USD back to the local currency, this foreign exchange inflow directly pushes up the Baht. The increased foreign exchange supply from gold trading has caused a noticeable supply-demand imbalance in foreign exchange pairs such as USD/THB.

As the Baht appreciated by 0.3%, Lavaron Sangsnit, Permanent Secretary of the Thai Ministry of Finance, held an emergency press conference, announcing that measures would be taken. The Ministry of Finance is studying the imposition of business tax on online gold trading, and the Bank of Thailand is also formulating corresponding trading restriction plans.

Regulatory Measures Gradually Escalate, Central Bank Takes Multiple Actions

Thailand’s authorities’ attention to gold trading is not a temporary move. As early as September, the Bank of Thailand had met with the Gold Traders Association and requested close monitoring of market developments. Now, this concern has escalated into concrete actions.

The central bank has instructed commercial banks to strengthen document review of USD sales transactions by gold traders. Additionally, Vitai revealed that regulatory authorities are applying for authorization from the Ministry of Finance so that the central bank can require major gold traders to report more detailed foreign exchange transaction data, gaining a clearer picture of the market.

Double-Edged Effects of Appreciation

The strong rise of the Thai Baht seems beneficial, but for Thailand’s export-dependent economy, there are hidden concerns. Currency appreciation can directly weaken the international price competitiveness of goods, which will undoubtedly add extra pressure to the already strained economic growth. The rapid policy response is an attempt to balance the spontaneous market forces with fundamental economic conditions.

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