Thailand: Revised gold trading rules to shield baht due soon: BoT

  • The government aims to revamp the trading regime for gold by the end of 2020 to prevent bouts of currency strength when the precious metal climbs in value.
  • Gold exports represent about 1% of Thailand’s GDP, compared to just 0.1%-0.2% in other markets, according to Goldman Sachs Group Inc. Shipments tend to rise alongside prices, pushing up the THB as foreign exchange flows into the country.
  • “We are in the process of adjusting the ecosystem of gold investment,” Bank of Thailand (BoT) Governor Veerathai Santiprabhob said in an interview in Bangkok.
  • “We need to have the foreign-currency deposit ecosystem. It is in process, a few banks are working with us, it should be rolled out very soon. It should be this year.”
  • Between mid-Jul 20 and early Aug 20 the THB become Asia’s top-performing currency versus the USD as gold rallied to a record. It weakened subsequently as the precious metal slid and the Thai economy continued to struggle. Overall this year, the baht is down about 4.5% against the greenback.
  • “Gold investors will have to place their money in foreign-currency deposits, and the foreign-currency deposit will be used as the mechanism to trade between individual investors and gold brokers,” Mr Veerathai said.
  • Mr Veerathai said he expects more volatility in the exchange rate as well as a substantial drop in the current-account surplus this year. There is a reduced perception of the baht as a safe haven compared with the past year or two, he added.

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