The Bank of Thailand (BoT) is persevering in its commitment to relax foreign exchange regulations as part of its development of a new foreign exchange ecosystem to stabilise the exchange rate in the longer term.
Rules for cross-border baht transfers and payment transactions were eased.
However, transactions that have a significant impact on the country's financial stability, such as the cross-border transfer of baht to pay for digital assets, are still prohibited, said the central bank.
The regulator also eased rules for foreign exchange hedging and document requirements. These measures are effective starting on Friday, said Alisara Mahasandana, the BoT assistant governor for financial markets operations.
Mrs Alisara said the easing of hedging rules would encourage business operators, especially exporters and importers, to protect against foreign exchange risk and reduce the cost of such financial transactions.
On average, local exporters hedge 19% of total export value, while local importers hedge 24% of the import value, according to the Bank of Thailand.
The central bank relaxed regulations last year for foreign currency deposit accounts by allowing local individual investors to invest in foreign assets with more flexibility.
These measures received a good response from retail investors. In 2021, capital outflow from local individual investors investing in offshore assets posted a 10-year high, supported by the market environment and the easing regulations.
For the next phase of the central bank's forex ecosystem, the bank wants to develop the forex service provider landscape by improving regulations governing non-banks, such as money changers and money transfer operators.
The move will support retail and small and medium-sized enterprises accessing forex services more conveniently and at a lower cost because these two segments are the key customers for non-bank service providers, said Mrs Alisara.
The loosening of forex regulations for non-banks would cover broader services, digital platform services and add flexibility for business operations. The central bank plans to gradually implement the easing from the end of this year through to 2024, she said.
Mrs Alisara said the central bank has been monitoring the baht's movement closely amid higher market volatility worldwide.
The baht has been weakening against the US dollar in line with regional currencies because of external factors, particularly the monetary policy of key central banks led by the US Federal Reserve.
The BoT has enough instruments to manage the foreign exchange rate, keeping it in line with market circumstances, she said.
