Central bank will allow gold trading in dollars
published : 10 Sep 2020 at 12:32
The Bank of Thailand will allow gold trading in US dollars, an assistant governor said on Thursday - a move to curb the impact of the precious metal on a stubbornly strong baht.
The revised rules should help reduce exchange rate volatility as domestic gold prices are linked to global gold prices, Vachira Arromdee told reporters.
"This is to provide more options for gold investors, such as for online trading," she said.
The central bank has sent to the Finance Ministry adjusted rules on foreign currency deposit accounts to support gold trading in dollars, Ms Vachira said.
The baht strengthened by 0.3% to 31.29 per US dollar at 1.15pm, which exporters say is much stronger than the 33-34 baht rate that they need for shipments.
The central bank has said gold shipments add upward pressure on the baht.
Households have invested a lot in gold and typically sell it whenever gold prices go up, or during economic hardship. The gold sold would be exported.
In January-July, gold shipments jumped 107% from a year earlier with a share of 7.1% of overall exports, which fell 7.7% during that period.
On Aug 28, central bank governor Veerathai Santiprabhob told Reuters that rules on foreign currency deposits would be relaxed "to make sure that gold trading will not have an unnecessary impact on exchange rates".
"The use of foreign currency deposits in gold trading in US dollars is one example," he said in the interview, adding Thais could also keep savings in foreign currency deposits.