The Bank of Thailand plans to further ease overseas investment rules by early next year, allowing more capital outflow, to temper gains in the export-reliant baht currency.
The BoT will increase the limit on foreign currency deposits and allow money transfers between foreign currency deposits held by individuals and companies, deputy governor Mathee Supapongse told reporters on Wednesday.
It is also weighing ending curbs on the type of overseas investment allowed in the long term, and may only cap the amount spent, he said.
The pledge to ease rules on capital outflow follows the baht’s surge from a 17-month low in April that threatens to aggravate the challenges for the economy, which relies on tourism and trade.
Both those drivers have been hurt by the virus pandemic, and continued baht gains pose a risk to export competitiveness.
“We’re looking to create an ecosystem that will make it easier for Thai investors to invest abroad,” Mr Mathee said. “This will not only help reduce the pressure on the baht but also diversify risks.”
The baht has rallied more than 6% from this year’s low in April, prompting the central bank to warn that if the currency were to strengthen quickly, it could hurt the nation’s economic recovery.
Thailand has grappled with currency strength for a number of years. There was some respite when the baht weakened in the first quarter of 2020 during the global sell-off caused by the pandemic.
The proposed changes to capital outflows rules will provide flexibility to all categories of investors, Mr Mathee said.
The central bank has also proposed to soon unveil a revamped trading regime for gold to prevent the precious metal’s gains from adding to the currency strength.