By Kitiphong Thaichareon and Orathai Sriring
BANGKOK (Reuters) – Thailand’s central bank has intervened to slow the Thai currency’s movement, an assistant governor said on Friday after the baht rose to its strongest levels in four years, threatening the country’s struggling economy.
“The central bank is closely monitoring and managing the movements of the baht during this period, as evidenced by the increase in foreign reserves,” Chayawadee Chai-anant told reporters.
“Our approach remains the same, ensuring the baht does not fluctuate or move too fast.”
The baht stood at around 31.87 per dollar on Friday, and is up about 8% this year, the second-largest gain amongst Asian currencies, behind only the Taiwan dollar.
The currency’s strength relative to regional peers is seen as a threat to exports and tourism, both key drivers of Southeast Asia’s second-largest economy.
The baht’s recent surge has been driven by a weaker dollar, a current account surplus, gold trading and political clarity, Chayawadee added. Recently appointed Prime Minister Anutin Charnvirakul’s new cabinet has now received royal approval.
However, the Bank of Thailand so far has no plans to introduce a gold tax as it needs to be discussed further, Chayawadee said.
“We have been in discussions with market participants due to the growing correlation between gold prices and the strengthening baht,” Chayawadee said.
“But implementing a gold tax is not an immediate plan, as it needs thorough discussions with market participants and consultation with the new finance minister. It’s a policy matter,” she said.
Taxation is “just one measure”, and the central bank is also looking at other potential collaborative efforts with market participants, including the promotion of gold transactions using U.S. dollars, she added.
Chayawadee also said there has been no unusual speculative trading in the currency via capital inflows.
The Thai government will work with the central bank to manage the baht, and also monitor capital inflows and gold trading for any irregularities, new Finance Minister Ekniti Nitithanprapas said on Thursday.
In the January to July period, Thailand’s gold shipments surged 82% year-on-year to $7.6 billion, with unusually large exports worth $2.1 billion to Cambodia alone.
Chayawadee said the central bank is working with the relevant agencies to investigate gold shipments to Cambodia.
(Reporting by Kitiphong Thaichareon and Orathai Sriring; Writing by Devjyot Ghoshal; Editing by David Stanway)
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