Thailand loosens rules on foreign earnings, allowing up to $10 million per transaction to be retained overseas.
Key Points
Here is a summary of the content in 60 words, formatted as a three-paragraph bulletized list:
- Thailand relaxes rules on foreign earnings
- New threshold: $10 million per transaction
- Eases baht pressure, cuts costs
Introduction to New Regulations
Thai individuals and businesses can now retain up to US$10 million per transaction in overseas income, a significant increase from the previous limit of US$1 million. This change, announced by the Bank of Thailand’s assistant governor, Pimpan Charoenkwan, aims to ease pressure on the Thai currency, the baht. The new threshold applies to approximately 92% of the total export value, allowing for more flexible management of earnings in US dollars.
Rationale Behind the Change
The Bank of Thailand’s decision to loosen rules on foreign earnings is part of a broader effort to restrain the baht’s strength, which is seen as not aligned with economic fundamentals. The currency has gained 1.4% against the US dollar this year, making it the best performer in Asia. By enabling businesses to hold onto US dollars without converting them into baht, the central bank hopes to reduce upward pressure on the baht and cut cross-border transaction costs.
Implementation and Additional Measures
The new regulation, effective January 19, allows for improved flexibility in managing US dollar earnings. Additionally, the Bank of Thailand is tightening scrutiny of foreign-currency inflows and oversight of gold transactions, citing concerns about the baht’s correlation with bullion prices. The central bank is also considering daily caps on baht-denominated bullion trading to ease pressure on the local currency. These measures aim to empower foreign-exchange control officers and promote a more stable currency market.
Source : Thailand lifts cap on forex repatriation to temper baht rally
