Bangkok: The Bank of Thailand has directed commercial banks to closely monitor gold shops involved in transactions with foreign partners as part of efforts to manage fluctuations in the value of the baht.
According to Thai News Agency, the Bank of Thailand has mandated that gold shops enforce stricter controls on forward foreign exchange transactions to mitigate their impact on the baht. Pimphan Charoenkwan, who serves as the Assistant Governor for Financial Markets at the Bank of Thailand (BOT), disclosed that financial institutions have been instructed to tighten regulations on these transactions by gold traders. This measure aims to address potential increases in the volatility of the Thai baht.
Financial institutions are now obligated to verify proof of gold sales from foreign counterparties for each transaction. They are also required to obtain invoices and gold shipment documents within two business days after a gold shop delivers the foreign currency. This is to ensure that the foreign currency sale genuinely stems from gold exports.
In addition, the Bank of Thailand is seeking public feedback on potential revisions to exchange control regulations. The proposed changes suggest that major gold traders should report transaction details to the Bank of Thailand. This is intended to enhance the monitoring of transactions, evaluate their impact on the baht, and consider the development of relevant policies.