Balance of payments problems under scrutiny

The increase in errors and omissions in the balance of payments may be linked to gold trading and the baht's appreciation against the US dollar, says the head of the Bank of Thailand.

- SOMRUEDI BANCHONGDUANG

According to central bank governor Sethaput Suthiwartnarueput, the regulator consulted with relevant authorities including gold traders to consider additional instruments for managing the baht more effectively. The central bank has proposed several approaches, including tax measures and promoting gold trading in US dollars.

However, stakeholders must continue discussions to finalise potential measures to curb baht volatility, he said. While the recent appreciation of the baht has largely stemmed from the dollar's weakness, the Thai currency has strengthened more than most regional currencies against the greenback, said Mr Sethaput.

This year the baht has appreciated by 7% against the US dollar. Gold trading remains another key factor influencing exchange rate movements, with the correlation between gold prices and the baht about 0.7, higher than for other regional currencies, he said.

Mr Sethaput said errors and omissions in the balance of payments, partly related to gold trading or exports, may also affect the baht's movements.