The Bank of Thailand (BoT) plans to further ease foreign exchange regulations to support the ease of doing business and enhance the country's foreign exchange ecosystem in the long run.
In the fourth quarter, the central bank is scheduled to implement additional relaxations as part of the third phase of its foreign exchange ecosystem initiative. This phase will focus on easing regulations related to money outflows for Thai citizens.
Key changes include raising the annual outflow limit from US$50,000 to $200,000, reducing restrictions on negative lists and modifying foreign exchange management rules under the national pooling method, according to Chananun Supadulya, director of the BoT's Foreign Exchange Administration and Policy Department.
Under the national pooling method, businesses will be able to borrow in baht for both domestic and international operations with greater flexibility in foreign exchange management.
This means, for example, that offshore companies operating in Thailand can finance their foreign parent companies in baht, or Thai companies can provide financing in baht to their overseas subsidiaries.
Additionally, the central bank will relax foreign exchange management rules for non-residents under the Non-Resident Qualified Company (NRQC) project.
At present, there are 82 foreign companies participating in the NRQC programme.
FX ecosystem
Ms Chananun noted that the central bank has continued relaxing foreign exchange rules under the FX ecosystem initiative, starting with the first phase from 2019 to 2021, followed by the second phase in 2022-23.
She said the bank has received positive feedback for the FX ecosystem development initiative as evidenced by the number of foreign currency deposit (FCD) accounts, which has grown by 21.9% from 2019 to reach 851,993 accounts now.
"The FX ecosystem represents a structural improvement for the long term, aimed at balancing the ease of doing business with maintaining exchange rate stability. It is designed to support both businesses and investors by providing greater convenience in managing foreign exchange risks," she said.
According to the central bank's economic update in June, the baht had slightly depreciated against the US dollar due to stronger than expected US non-farm payroll data, leading to market speculation that the Federal Reserve (Fed) would maintain high interest rates for an extended period.
However, as of July 26, the baht had appreciated against the greenback, with expectations the Fed might cut its policy rate twice within this year.
The baht opened at 35.48 per dollar yesterday, up from 35.63 per dollar on Wednesday, reflecting a weaker dollar as markets anticipate a potential rate cut by the Fed in September, according to Poon Panitchpibun, a money market strategist at Krungthai Global Markets.