BANGKOK, 16 December 2025 – The Bank of Thailand (BOT) has escalated its oversight of foreign exchange inflows, targeting specific sectors that have amplified market volatility. The central bank’s intervention follows a sharp 2.5% surge in the Thai Baht (THB) against the US Dollar since early December, a rise that has sounded alarms across Southeast Asia’s second-largest economy.
The Focus on Gold
Governor Vitai Ratanakorn announced on Tuesday that the BOT has instructed commercial banks to implement “strict verification” of documentation for currency transactions, with a particular emphasis on the gold trade. In Thailand, gold-related transactions can account for up to 20% of total foreign exchange volume during peak periods.
When gold prices rise globally, domestic traders often sell US Dollars to buy Baht, creating a localized supply-demand imbalance that artificially strengthens the currency. To combat this, banks must now verify that every forward FX deal is linked to a genuine physical export, requiring supporting invoices and shipment paperwork within two business days.
A Convergence of Pressure
The Baht’s strength, currently trading near 31.5 per dollar, is being driven by a “perfect storm” of factors:
- Seasonal Tourism: The year-end “high season” has brought a massive influx of foreign currency.
- Export Rebound: Robust year-end shipping volumes have increased the demand for Baht.
- Capital Inflows: International investors have renewed their appetite for Thai equities and bonds.
The government has mirrored the central bank’s concern. Finance Minister Ekniti Nitithanprapas characterized the Baht as “excessively strong,” warning that its current trajectory exceeds what the nation’s economic structure can sustain without damaging export competitiveness.
Shift in Strategy
This clampdown represents a tactical pivot from the BOT’s 2025 “Mega Project,” which aimed to liberalize the FX ecosystem. While the long-term goal remains a modernized and flexible market, the immediate priority has shifted to macroprudential stability. By requiring more granular data from major gold dealers, the BOT is effectively pulling the veil back on a sector that has long operated with significant influence over the nation’s exchange rate.
