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The Bank of Thailand (BOT) has announced a further relaxation of the country’s foreign exchange regulations, to allow for easier capital movement and easier hedging of currency risks amid the Thai baht volatility. These latest changes include measures to reduce limits on transfers, facilitate hedging, and remove a requirement for supporting documents.
In the Press Release No. 22/2022 issued on April 18th, the BOT said the changes will “drive the new FX ecosystem” and “solve the structural problems of the Thai forex market”, while also lowering the cost of investing and transacting in foreign currencies.
The BOT is scrapping a USD 50 million annual limit on lending to unaffiliated companies in foreign countries, as well as limits on purchases of overseas real estate.
Firms will no longer need to seek permission to transfer money to their own accounts held overseas or to pay expenses overseas. They will also be allowed to buy foreign currency to pay for goods domestically at global market reference prices. To date, inter-company transfers were allowed only through foreign currency deposit accounts.
Thai firms will also be allowed to manage their foreign exchange risk exposures through hedging transactions more freely, particularly for those that are quoted on global markets. Previously, permission was required on a case-by-case basis.
The BOT also said fewer supporting documents will be required in foreign currency transactions to lower costs and the paperwork burden. Customers will no longer need to provide documentation on a per-transaction basis.
Should you have any questions regarding this new Thai foreign exchange policy, please do not hesitate to contact our team at contact@orbis alliance.com.