Gold’s surge has propelled the Thai baht up 10% this year, reaching its highest level since June 2021. Thailand’s status as a gold trading hub has led to record prices converting into FX inflows, bolstering the baht. Concerns arise as the strong baht hampers exports and trade, prompting policymakers to address the issue.

Despite Thailand’s economic struggles, the Thai baht has emerged as one of the region’s standout currencies due to gold’s unprecedented rally. The baht has strengthened by 10% against the dollar, reaching its peak since June 2021, fueled by gold’s exceptional performance.

Spot gold is currently trading around $4,485 per troy ounce, marking a 70% increase this year. Factors contributing to gold’s surge include central bank demand, geopolitical uncertainty, and Fed monetary easing. The baht’s rally seems disconnected from Thailand’s economic challenges, with the benchmark SET stock index down by 9%.

Dollar-denominated gold prices surging this year have led to a 52% increase in Thailand’s gold exports, totaling $11.6 billion from January to October. The baht’s strength has raised concerns among policymakers, with Finance Minister Ekniti Nitithanprapas stating that the strong baht is detrimental to the export-oriented economy. Thailand’s central bank governor suggests regulating the country’s gold trade.

Thailand’s finance ministry announced a briefing involving the central bank, finance ministry, and securities regulator to address the baht’s strength. The surge in gold prices and its impact on the currency will be discussed further in the upcoming briefing. Gold’s dominance in Thailand’s economy and its influence on the baht continue to be a topic of concern for policymakers.

Read more at Yahoo Finance: Gold’s record-setting rally quietly turned an Asian currency into this year’s breakout trade