Crisis for Thailand as the rockets in value putting exports and foreign tourism under further pressure

December 24, 2025

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Crisis for Thailand as the rockets in value putting exports and foreign tourism under further pressure

Baht blast hits Thailand as the currency rockets toward ฿30 per US dollar, hammering exports and shrinking tourist spending. Officials scramble to trace gold-fuelled capital flows amid fears of laundering and fresh economic impact on an already fragile situation.

Thailand’s government and financial agencies are scrambling to respond to the surging value of the Thai baht. Analysts warn that accelerating buying momentum could push the currency through the ฿30 per US dollar threshold. Such a move would deal a severe blow to an already weakened export sector and a softening foreign tourism industry. Concerns are also mounting that the baht sits at the centre of an exploit, with Thailand’s gold market allegedly being used to launder international funds from illicit sources.

Finance Minister Ekniti Nitithanprapas has ordered an urgent, full-scale response to the crisis, directing his ministry, the Bank of Thailand and the Securities and Exchange Commission (SEC) to act immediately. (Source: Thai Rath)

Thailand’s currency has strengthened at a speed that has forced urgent coordination across key state agencies. Since November 24, the baht has appreciated by about 7%. It moved from 32.25 to 31.06 per US dollar. Since the start of 2025, the baht has risen 9.4% against the dollar. As a result, it has outperformed every major regional currency.

This surge followed a recent interest rate cut by the Bank of Thailand’s Monetary Policy Committee. At the same time, the economy remains under pressure. Growth is weak across several sectors. Structural problems persist and remain unresolved. Moreover, confidence has been further strained by geopolitical developments.

Thailand is currently engaged in a border conflict with Cambodia. Consequently, fiscal pressure has increased. Security spending has risen sharply. This week alone, the cabinet approved an additional ฿5 billion. The funds are allocated to security operations to protect national sovereignty. As a result, budget flexibility has narrowed further.

External slowdown, weaker tourism and a stronger baht push Thailand’s economy down further

Meanwhile, external conditions have deteriorated. Export markets have become increasingly difficult. Price competitiveness for international tourists has weakened across key destinations. The stronger baht has compounded an already failing economy.

Certainly, tourism performance has declined. Authorities estimate foreign tourist arrivals will fall between 7% and 10% this year. The outcome depends on late seasonal arrivals. Even so, currency strength has reduced foreign spending power.

Against this backdrop, exporters have raised alarm bells. On Wednesday, the Thai National Shippers’ Council issued a formal warning. It said conditions for exporters are nearing an emergency.

The council cited exchange rate appreciation as a central risk. As a result, margins have compressed across multiple industries. Contract pricing has also become more difficult.

The Chairman of the body, Dhanakorn Kasetrsuwan, said he feared that the momentum created in the market would drive the baht even higher.

“A stronger baht, driven by capital flows unrelated to real economic activity, poses challenges for exporters, particularly small and medium-sized enterprises that rely on price competitiveness and cannot quickly adjust advance orders,” said Mr Dhanakorn.

“While these exporters face rising costs, they see no benefits from capital inflows.”

Authorities turn to surging gold trading and capital flows as baht strength outpaces the economy

Meanwhile, policymakers have moved quickly to identify the causes. The Ministry of Finance, the Bank of Thailand and the Securities and Exchange Commission began joint consultations. Their focus has centred on capital flow dynamics.

In particular, attention has turned to gold trading activity. This sector has expanded rapidly during the current rally in global gold prices.

International gold prices have surged to record levels. Recently, prices approached US$4,500 per ounce. This year, gold prices have risen nearly 70%. At the same time, the baht has gained by over 9%. Consequently, the baht has become the strongest-performing currency in the region. Analysts have identified a high correlation between gold prices and the baht throughout 2025.

Domestically, gold trading volumes have surged. Daily turnover has increased significantly. On several days, volumes approached levels seen on the Stock Exchange of Thailand. As a result, gold trading has become a major driver of currency flows. Gold companies trade largely in US dollars. When prices rise, they sell dollars into the domestic market.

Heavy gold trader dollar sales lift the baht and drive currency gains beyond local fundamentals

In some periods, these dollar sales have been dominant. Net dollar sales from gold traders have accounted for 40% to 50% of national net dollar sales. Consequently, sustained upward pressure has been placed on the baht. The currency has strengthened rapidly. It has also diverged from domestic economic fundamentals.

Previously, the Bank of Thailand attempted to mitigate these effects. It pushed gold trading to be conducted in US dollars. It also tightened foreign exchange regulations for gold companies. Large traders were required to submit detailed transaction reports. However, despite these measures, the impact has persisted. Gold-related flows continue to influence the exchange rate strongly.

At the same time, global conditions have reinforced the trend. The US dollar has weakened broadly. Investors adjusted expectations around US Federal Reserve policy. Consequently, the dollar index fell to around 98.10. This decline occurred during Asian trading sessions. Meanwhile, the Japanese yen also strengthened sharply.

Weaker US dollar and firmer yen reinforce Asian currency gains and extend Thailand’s baht rally

The yen appreciated about 0.7% to 156 per dollar. As a result, Japanese authorities issued intervention warnings. They said the currency had deviated from fundamentals. These regional moves supported Asian currencies overall. Therefore, the baht benefited from broader market dynamics as well.

Recently, the baht reached a 4.5-year high. It traded around ฿31.10 to ฿31.12 per dollar. Currency traders noted continued momentum. Some warned the baht could test ฿30 to the dollar. In the short term, the strength has remained persistent. This has occurred despite weak domestic demand indicators.

Meanwhile, speculation emerged around digital asset trading. Some market participants suggested USDT activity was influencing the baht. However, regulators rejected this claim. The Securities and Exchange Commission clarified the data. USDT trading represents only 1.22% of total foreign exchange inflows. Dollar-to-baht conversions by digital asset firms account for just 0.17%.

In total, foreign exchange inflows amount to about ฿29.1 trillion. Therefore, authorities concluded that digital asset activity has no material impact. As a result, regulatory focus shifted back to gold trading and capital flow transparency.

Regulators dismiss digital asset impact and refocus their policy efforts on gold driven capital flows

In response, Deputy Prime Minister and Finance Minister Ekniti Nitithanprapas issued direct instructions. He ordered immediate coordination among agencies. The Permanent Secretary of the Ministry of Finance met with senior regulators. These included the Bank of Thailand governor and the SEC secretary-general. Together, they reviewed the exchange rate situation.

Following the meeting, three concrete measures were agreed upon. First, the Revenue Department will strengthen data reporting. Online gold trading platforms will be required to submit transaction data. The process will mirror existing systems for online goods and services. Consequently, authorities will gain clearer visibility over volumes and flows.

Second, the Revenue Department will consider a specific business tax. This tax would apply to gold bars sold through online platforms. Importantly, the measure will be limited to online transactions. Traditional physical gold trading will remain unchanged. Brick-and-mortar gold shops will not be affected.

Government and central bank target gold trading volume and data reporting while keeping flows open

Third, the Bank of Thailand will examine transaction volume controls. It will study options to regulate gold trading volumes. This may include setting limits for online transactions. The goal is to moderate large and rapid currency flows. These flows are linked directly to gold price movements.

At the same time, officials stressed what will not change. Regular trade will continue uninterrupted. Import-export activity will not face restrictions. Documented fund transfers will proceed as usual. The measures are not capital controls. They are also not intended to block foreign inflows.

Instead, the emphasis will be on documentation. Financial institutions will face stricter verification requirements. Banks must verify fund sources and purposes more thoroughly. If large or unusual transactions appear, further checks will follow. As a result, oversight will increase without disrupting legitimate activity.

The Revenue Department confirmed the measures are still being developed. Officials estimate completion within two weeks. Guidelines will be announced shortly after. Enforcement is expected soon. Meanwhile, the Ministry of Finance has stated it is monitoring developments closely.

Analysts warn against heavy-handed intervention as fragile markets demand expert coordination

Market analysts have urged measured implementation. Some economists warned against excessive intervention. They noted Thailand’s capital markets remain fragile. Sudden disruptions could affect liquidity. Regulators have acknowledged these concerns. Therefore, coordination among agencies has been prioritised.

Economists at major banks have pointed to global drivers as primary forces. They said domestic factors remain difficult to isolate. Authorities have previously targeted grey money flows. However, such measures take time to affect markets. In the interim, currency momentum has continued.

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Research analysts have highlighted data gaps. They called for better integration across agencies. Tracking gold flows and physical holdings remains critical. Improved data collection could support more precise policy responses. Officials have agreed on the need for closer collaboration.

The Ministry of Finance confirmed that all three measures will proceed. Enforcement is expected within weeks. Meanwhile, the baht remains strong. Its appreciation has become a central macroeconomic issue. It affects exports, tourism, and fiscal planning simultaneously.

With gold prices elevated and global currencies volatile, pressure on the baht has intensified. Consequently, authorities are now targeting the most immediate drivers. Gold trading activity sits at the centre of this response. The coming weeks will test the effectiveness of these measures.