BoT to ease baht pressure

The Bank of Thailand has proposed the Finance Ministry raise the limit for foreign income repatriation to Thailand, aiming to ease pressure on the baht.

Amid heightened swings in the baht-US dollar exchange rate that are driven largely by external factors, Pimphan Charoenkwan, assistant governor for financial markets at the regulator, said the bank recommended additional measures to help stabilise the currency and keep it more aligned with regional peers.

The measures include a proposal for increasing the trigger for foreign income that must be repatriated to Thailand to UScopy0 million per transaction, up from the existing copy million. The new measure is expected to take effect by the end of the year.

According to the central bank, this added flexibility would help the private sector better manage foreign exchange liquidity and ease upward pressure on the baht.

Over the past week, the baht has strengthened by about 1% against the dollar, mainly due to the greenback's weakening following shifting expectations surrounding the US Federal Reserve's monetary policy outlook.

The baht also came under pressure from exporters' foreign exchange sales, bond inflows, and dollar selling by major gold traders amid a more than 4% surge in global gold prices, said the central bank.

The regulator also proposed the Finance Ministry tighten supervisory practices by directing financial institutions to apply stricter checks before processing gold-related foreign exchange transactions.

In addition, the central bank proposed the ministry require large gold traders to report relevant transactions.

This approach would help to improve authorities' monitoring and assessing of potential impacts on the baht, as well as support the formulation of appropriate policy measures, said Ms Pimphan.

Financial markets remain highly uncertain and she said the central bank will continue to monitor baht movements, standing ready to mitigate excessive volatility to minimise adverse impacts on businesses.

On Monday, the baht opened at 32.09 per dollar, strengthening from Friday's close of 32.12.

The firmer baht largely reflected the weaker US dollar and the rebound in global gold prices, said Poon Panitchpibun, money market strategist at Krungthai Global Markets, the research arm of Krungthai Bank.

The bank expects the baht to trade within a range of 31.85–32.45 per dollar this week.

Read more: here.