If you’re trading in Thailand this year, then all that glitters is gold! In May, the annual gold shipments within the country were seen to increase by 735%. By comparison, overall exports in the country dropped by 22.5% in a year-on-year basis. Gold is the only asset in Thailand that has seen such a dramatic increase, and this has attracted the attention of the global market.
Gold prices have continued to rise, and locals within the country have taken advantage of this, selling their gold at inflated prices to help combat the economic impact of the current global crisis. The market is currently experiencing 7.5 year high rates for their gold, and although the rates are constantly changing, at the time of writing they sit at $1,769.90 an ounce.
As a result of the unprecedented high rates and the upward pressure that this is putting on the value of the Thai Baht, forex traders may have their transactions controlled during night sessions. This has been proposed by the bank of Thailand, who are struggling to cope with the increase in demand for gold rates. This will help to better control and regulate the market, as it is at its most volatile during these sessions.
Forex Trading in Thailand
Forex trading in Thailand is still considered to be one of the most exciting emerging markets in South East Asia, and the burgeoning gold rates are only helping to cement this position. What makes the market both unique and appealing is that the Thailand Securities and Exchange Commission and the Bank of Thailand (BOT work together in unison to provide a solid regulatory structure.
This encourages both retail investors and long-term traders to be confident in taking risks and investing in the market. What’s more, Forex investors in Thailand enjoy regulation from The Thailand Bank (BB), which only increases the stability of the industry.
According to Reuters, “In November, the BOT said it was prepared to approve gold futures trading in foreign currencies in the next phase, after allowing investors to trade gold in foreign currencies and to keep such proceeds in their foreign currency deposit accounts.” And it is clear that this decision has proved to be a success for the Forex market in Thailand.
The impact of the increasing gold prices on the Baht, and the wider economic situation in Thailand remains to be seen.
The Bank of Thailand is expected to long at one or a combination of the following options to limit the impact. These options include: relaxing rules on fund outflows, limiting some gold-related activity or allowing more trading options.
Optimism prevails in the Thai Forex market, and much of this buoyancy has been driven by the demand for gold. This gold rush, which is expected to stabilize over the next quarter despite an increased global appetite for gold, will put the country in a much stronger position and help to counter balance the contraction of the economy that it is currently experiencing.