BANGKOK, Sept. 8 (Xinhua) -- The Bank of Thailand (BoT) said on Tuesday that it will roll out new measures to shield the Thai baht from strengthening excessively in the face of increasing gold prices.
"We are in the process of adjusting the ecosystem of gold investment," said BoT Governor Veerathai Santiprabhob. "We need to have the foreign-currency deposit ecosystem to protect the baht from strengthening excessively."
According to investment bank Goldman Sachs, Thailand's gold exports represent about 1 percent of the country's gross domestic product (GDP); also, shipments tend to rise alongside prices, pushing up the baht as foreign exchange flows into the country.
The BoT governor said the central bank is working with Thai commercial banks in defining the mechanism of the new measures.
According to the BoT statistics, in mid-July and early August the baht become Asia's top-performing currency versus the U.S. dollar as gold rallied to a record.
It also weakened as gold slid while the Thai economy continued to struggle in the face of the COVID-19 pandemic.
Overall this year, the baht is down about 4.5 against the U.S. dollar, according to BoT.
Veerathai said usually gold investors place their money in foreign-currency deposits, and the foreign-currency deposit will be used as the mechanism to trade between individual investors and gold brokers.
"That is one way to stay away from trading in Thai baht," said Veerathai.
The BoT governor said he expects more volatility in the exchange rate as well as a substantial drop in the current-account surplus this year.
"We have to monitor the value of our currency very closely and make sure that it's conducive to Thailand's economic recovery," he said. Enditem
