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bank Thailand It plans to tighten regulations on online gold trading to curb the impact of price fluctuations on the local currency.
Central Bank Assistant Governor Pimpan Charoenkwan said on Friday that the new measures would not have a major impact on the increasingly popular gold trading but would increase transparency on online platforms.
The regulations, which will take effect in March, will limit online gold transactions in Thai baht to 50 million baht ($1.6 million) per user per day. Any transactions above this limit require approval from the authorities.
However, this rule does not apply to users who have held more than 50 million baht worth of gold in their accounts before the end of January. They will be allowed to sell their holdings back to the platform operator without seeking additional permission.
This provision also does not apply to foreign currency gold transactions or physical gold transactions.
Gold traders will also be required to keep some transaction records and regularly report these activities to the Bank of Thailand, Pimpan said.
International gold prices have more than doubled this year, surpassing $5,000 an ounce for the first time earlier this week.
Gold prices in Thailand surged above 80,000 baht ($2,545) per baht weight for the first time on Thursday before falling sharply on Friday, underscoring the volatility that has fueled concerns.
The baht weight is the standard unit of measurement for the weight and purity of gold in Thailand. A 23 karat gold bar typically weighs 15.244 grams (approximately 0.54 ounces) and gold jewelry typically weighs 15.16 grams (approximately 0.53 ounces), but varies slightly based on purity.
Thailand has never properly regulated gold trading, despite it being the country’s main form of investment, Bank of Thailand Governor Vithai Ratanakorn said in a live speech at an economic seminar on Wednesday.
“Collecting gold has become a culture in Thailand, and the stock market has not performed well in the past few years, so more people are turning to gold trading,” he said.
Gold stores are the de facto financial institutions in Thailand. Many established stores operate online platforms that allow customers to buy and sell gold without having to visit in person.
Vithai said online gold trading would have a significant impact on the baht. When gold prices soar, Thai investors tend to sell gold in large quantities. Gold shops then sell the gold in US dollars and convert the proceeds back into Thai baht, causing its value to rise.
He also said the new rules would also help combat money laundering.