He was speaking after a meeting between the ministry and the Bank of Thailand to discuss the outsize impact gold trading is having on the appreciation of the baht, to the detriment of the export-dependent economy, reports the Bangkok Post.
The baht’s gains against the US dollar are being driven by “huge” gold trading and its rise is not in line with fundamentals, central bank governor Vitai Ratanakorn told a media briefing.
The central bank is hopeful that baht strength can be eased by measures on gold trading, and there are no plans to take any drastic measures against capital movement, Mr Vitai said.
The baht has gained 10% against the dollar so far this year to become Asia’s best-performing currency. It has now reached its highest level against the dollar in more than four years.
The baht was trading at 31.16 per dollar at midday, down from around 31.05 earlier.
World gold prices set a record of $4,497.55 an ounce in the spot market, with US futures contracts topping $4,500. Thai selling prices were quoted at B66,000 per baht-weight (15.2 grammes) at midafternoon Tuesday.
The BoT last week ordered tighter scrutiny of foreign exchange transactions linked to gold trading and instructed commercial banks to closely monitor foreign currency inflows.
On Monday, the central bank said in a statement that it had held a meeting with gold traders to explain new guidelines that require them to provide detailed transaction data to the central bank, including trades conducted via online platforms.
The reporting, which will be mandatory for gold traders with an average annual trading value of at least B10 billion over the past five years, is designed to help the bank assess measures to mitigate the impact of gold trading on the currency, it said on its website.
Traders will also need to retain related transaction documents for inspection by the regulator, the central bank said.
Gold trading in Thailand currently involves a 15% withholding tax on capital gains for 99.99% purity gold bar forward contracts on the Thailand Futures Exchange.
While physical gold sales are generally exempt from value-added tax (VAT), excise tax of 10% may apply to jewellery.
Gold traders have voiced opposition to a tax on physical gold and online transactions, saying such efforts to rein in baht appreciation would cause the country to lose its status as a gold trading hub.