Thais Keen to Cut ‘Grey Money', Gold Seen Lifting the Baht

The strength of the Thai baht has become a key issue for Thailand’s new government, as it has climbed to levels that could undermine the country’s two biggest economic engines – tourism and exports.

Many Asian currencies have risen as the US dollar has weakened this year, but the baht – now at a four-year high – has seen the second-highest rise, up 8% against the dollar, behind only the Taiwan dollar.

The Bank of Thailand and financial policymakers with the incoming government have linked the currency’s rise to a boom in gold trading that many believe stems from far more than the record levels the precious metal has risen to this year. Gold topped US$3,700 an ounce yesterday.

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Thailand has been buffeted by upheaval in neighbouring countries – a ramped-up civil war in Myanmar raging for three and half years, that has driven several million people across its porous 2,400km-long border, plus a range of other challenges, such as an influx of tech-savy Chinese criminal gangs over the past decade that have expanded from casinos that long ringed Thailand’s borders to vast and frightening scam centre hubs around Myawaddy, northern Laos and throughout Cambodia.

Thai authorities have had their hands full countering a never-ending wave of home-grown scams, involving crypto, digital assets and other schemes promising high returns, with the proceeds then spread through multiple ‘mule accounts’, which police often rush to shut down.

But the proliferation of scam centres in Cambodia and “crypto-friendly” money laundering outlets, warmly embraced by local heavyweights in Phnom Penh after the severe economic downturn caused by Covid-19, has been a further burden for Thailand.

Bank of Thailand governor Sethaput Suthiwartnarueput, who is due to finish his five-year term at the end of this month, shed some light this week on the impact of these “grey businesses”, which have always been a healthy chunk of the Thai economy, but have expanded to such an extent that tax measures may now be needed to reduce their impacts on the national economy.

Surge of gold exports to Cambodia

Thailand has seen an unusual surge in gold exports to Cambodia this year, with Thai gold shipments in the first seven months of 2025 rising by 19% from a year earlier to 71.3 billion baht (US$2.24 billion). That rivals exports to Singapore and Switzerland, which are established regional and global gold hubs.

Gold trading, Sethaput said, had been a key factor influencing the country’s exchange rate movements, more than other regional currencies. But there had also been errors and omissions in Thailand’s balance of payments, he said.

Central bank data listed Thailand’s balance of payments at $12.4 billion in 2024, but the country needed greater monitoring, he said, because there were unusual discrepancies – as errors and omissions were even higher, at $15.2 billion, the Bangkok Post reported on Tuesday.

Last year, people in Cambodia bought a record 106 billion baht (US$3.3 billion) worth of gold from Thailand and the baht usually gets a boost when such trading occurs.

“It should be the role of government agencies to track these flows, including gold exports to Cambodia, and determine whether they are connected to grey money or cryptocurrency, as the public suspects,” Sethaput said.

The central bank chief said the Thai economy needed 12 quarters to bounce back from the Covid pandemic, “compared with 17 quarters after the 1997 [Asian] financial crisis, but now it faces US tariffs and structural weaknesses such as high household debt levels.

The outgoing central bank governor said on Tuesday that discussions are now underway to find and deploy measures to counter the currency’s strength.

‘A tool for money laundering’

Chairman of the Federation of Thai Industries Kriengkrai Thiennukul has also noted the “suspicious” amount of gold and jewellery exports to Cambodia, and said the issue “should be a priority for policymakers” because excessive baht moves put Thai businesses at a disadvantage.

“It may come from grey businesses like scammers and casinos. It’s possible that they use gold as a tool for money laundering,” he was quoted as saying.

Another factor affecting the baht could be remittances – money sent home – by the millions of migrant workers. About four million are registered, but the real number is likely much higher.

Last week, Vorapak Tanyawong, who is expected to be deputy finance minister in Prime Minister Anutin Charnvirakul’s government, suggested that they may impose a business tax on gold trading, and make gold trading in US dollars exempt from tax, to reduce its impact on the baht.

US tariffs, sluggish consumption

Southeast Asia’s second-largest economy is struggling with US tariffs and sluggish consumption, with households mired in debt.

The state planning agency forecast economic growth of 1.8% to 2.3% this year, less than last year’s 2.5% expansion, which already lagged regional peers.

A rare bright spot has been exports, which have seen a value increase of 14.4% annually in the first seven months. But a slowdown is now expected, following a 19% tariff imposed by the United States, Thailand’s largest export market.

“A strong baht reduces export and tourist revenue via both pricing and volume effects,” said Kobsidthi Silpachai, head of Capital Markets Research at Kasikornbank.

“The baht’s strength comes at a bad time ahead of the peak tourist season, which is likely to prompt holiday makers to shop elsewhere for better value.”

Faced with a stronger baht, Thai manufacturers are also struggling to compete with regional rivals like Vietnam, even though it has a marginally higher tariff rate of 20%.

“Instead of benefitting from the tariff gap, the strong baht ends up putting us at a disadvantage in exports. That’s why many industries are complaining,” said Nava Chantanasurakon, vice chairman of the Federation of Thai Industries.

“If we don’t address the baht issue, confidence in exports will drop.”

Industries particularly feeling the pain include the electronic parts industry and the automotive sector, he said. Thailand is a regional auto production and export hub for top Japanese carmakers such as Toyota and Honda, plus China’s big EV brands.

The other risk is to the tourism sector, already grappling with a 7% year-on-year fall in foreign arrivals.