Thai gold traders plan US dollar-based trading to curb baht rally
The rally adds to economic shocks facing Thailand’s economy, as it erodes export competitiveness and hurts tourist spending
[BANGKOK] Thailand’s largest gold traders plan to promote US dollar-denominated transactions, aiming to weaken the metal’s influence on the local currency and head off the threat of a punitive tax.
A group of 14 bullion dealers will upgrade their online trading systems within three to six months to support US dollar-based transactions, said Kritcharat Hirunyasiri, chairman of MTS Gold Group.
The Bank of Thailand (BOT) has agreed to work with commercial banks to make currency conversions easier to support the platform, he said on Thursday (Jan 8).
The move to nudge more Thais to buy and sell gold in US dollars follows a threat of the imposition of a special tax to curb speculative trading that has driven the baht to its highest level since 2021.
The currency rally – at times driven by gold sellers seeking to convert US dollars into baht – has added to a string of economic shocks facing Thailand’s economy, as it erodes export competitiveness and hurts tourist spending.
The baht gained 8 per cent last year, the second-best performer in Asia, prompting the central bank to tighten reporting rules for commercial banks on gold-related transactions.
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Daily gold trading volumes in Thailand have at times matched those on the local stock exchange, prompting traders to transact unusually large amounts of US dollars.
At peak periods, gold-related deals accounted for 50 to 60 per cent of Thailand’s total US dollar trading, said the central bank.
While the BOT has long urged Thais to embrace US dollar-based gold trading, adoption has been limited as they are accustomed to transacting in baht, and find foreign-currency deposit procedures cumbersome, Kritcharat said.
If the latest move fails to gain traction, tax measures – such as a capital-gains tax on baht-denominated gold trades – may be needed to accelerate adoption, he added.
“This will be a major overhaul of Thailand’s gold trading landscape,” Kritcharat said. “This time, we need to make people familiar with trading gold in US dollars, just like the digital money. It will be good for all parties, and the central bank should be happy.”
Kritcharat expects the nation’s top three gold traders, which together account for about 90 per cent of the market, to upgrade their systems within three months to facilitate US dollar-based transactions.
He said that the total bullion trading was estimated at around 10 trillion baht (S$407.7 billion) last year, doubling from 2024.
Thailand remained a net gold importer last year, bringing in 180 tonnes while exporting 110 tonnes, said the Thai Gold Traders Association.
“The proposal to impose a special business tax on gold is a bad idea, and it can destroy the whole gold industry,” said Jitti Tangsithpakdi, president of the traders’ association. “Gold shouldn’t be taxed as it has been treated like money by Thais. It’s (a) part of people’s savings.” BLOOMBERG
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