BANGKOK (AP) — The Bank of Thailand plans to tighten regulations on online gold trading to curb the impact of fluctuating prices on the local currency.
The new measures will not have a big impact to gold trading, which has become increasingly popular, but will improve transparency of online platforms, the central bank’s assistant governor, Pimpan Charoenkwan, said Friday.
The regulations, which will take effect in March, will cap online gold transactions conducted in Thai baht at 50 million baht ($1.6 million) per user per day. Any transaction exceeding that limit will require approval from the authorities.
However, the rules will not apply to users who already were holding 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 platform operators without seeking additional permission.
The regulations will also not apply to gold trades in foreign currencies or to physical gold transactions.
Pimpan said gold traders will also be required to maintain some transaction records, and regularly report those activities to the Bank of Thailand.
The international price of gold has more than doubled this year and earlier this week topped $5,000 per ounce for the first time.
Gold prices in Thailand surged above 80,000 baht ($2,545) per baht-weight for the first time on Thursday, before dropping sharply on Friday, highlighting the volatility that has raised concerns.
Baht-weight is the standard unit for measuring the weight and purity of gold in Thailand. It usually is 15.244 grams (about 0.54 ounces) for 23 karat gold bars and about 15.16 grams (0.53 ounces) for gold jewelry, but varies slightly depending on purity.
Thailand has never properly regulated gold trading though it’s a major investment method in the country, the Bank of Thailand’s governor, Vithai Ratanakorn, said in a livestreamed speech to an economic seminar on Wednesday.
“Collecting gold is already a culture in Thailand, and these past few years the stock market has underperformed, so more people turned to gold trading,” he said.
Gold shops serve as de facto financial institutions in Thailand. Many established shops operate online platforms, allowing customers to buy and sell gold without going in person.
Online gold trading can significantly affect the baht, Vithai said. When gold prices surge, Thai investors tend to sell gold in large volumes. Gold shops then sell the gold in U.S. dollars and convert the proceeds back into baht, causing its value to rise.
He also said the new regulations will also help combat money laundering.