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US dollar denominated gold trade to be allowed

Jack Burton

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US dollar denominated gold trade to be allowed | Thaiger
PHOTO: Tasty Thailand

Ending decades of regulations limiting gold trade in Thailand to the baht, the US dollar will now be allowed as well. 2 weeks ago, in a bid to slow the rapidly rising baht and avoid landing on the US list of “currency manipulators”, the Bank of Thailand announced a policy to allow trading gold products in US dollars. Market players say the central bank will consider dollar-denominated trade for foreign-related capital market products in the near future. A source familiar with capital markets said:

“The investment world has changed. Domestic investment alone is not suitable and diversifying overseas is better. Thais should be gradually educated about foreign exchange risk. Relaxing rules and letting people open foreign currency deposit accounts freely is one measure to help people understand risk related to foreign asset investment.

The Thailand Futures Exchange and the Stock Exchange of Thailand have long requested permission from the Bank of Thailand to trade foreign-related products like gold online futures, oil futures and foreign equity products in US dollars, but it was denied because the Currency Act of 1958 mandates that trading goods and services in Thailand must be conducted in baht.

US dollar denominated gold trade to be allowed | News by Thaiger

A former regulator at the central bank, speaking on condition of anonymity, said gold trading is speculative and does not create economic value, but with the right implementation, trading gold or assets in foreign currency terms could be a good risk management tool.

“I understand the central bank’s purpose in allowing trade of gold in dollars because gold imports and exports could disrupt the trade balance and the exchange rate. It would be better if the impact of exchange rates is separated from gold import/exports.”

He says currencies and interest rates are quite complicated and traded among big players, thus trading gold in dollars will be more advantageous for those with high net worth.

Trading gold in dollars may take a few years of adjustment, he added.

MTS Gold Futures’s CEO says it could take a few tries until the market adjusts as the structure of the gold business in Thailand has many moving parts: customers, gold retailers, gold exporter/importers, and commercial banks, which offer currency exchange and FCD.

“The current infrastructure is not ready yet. How can people trade gold in dollars if they lack a dollar currency account?”

Few Thais own FCD accounts and if they are not exporter/importers and want to have US dollars, they have to go to bank branches to exchange baht for dollars and bring ID cards or documents related to travelling overseas.

Domestic gold buyers are divided into 2 types: collectors who are willing to buy gold and hold it (like retail investors buying corporate bonds for interest return to hold to maturity), and gold speculators who trade in the short term for profit.

“Most speculators deal in daily domestic bullion trade, where someone trades gold in the global marketplace in dollar terms. Those unfamiliar with exchange rate risk trade derivatives of gold online futures on TFEX.”

Collectors prefer to buy physical gold to collect as individual reserves for a long time (sometimes decades or even generations). When the economy tanks or the price hits a high point, they sell their reserves. Then businesses export excess gold, bringing money into the country.

“Thais accumulate gold in individual reserves for many decades. This is a unique mechanical difference from the other countries. Most Thais love to accumulate physical gold in their personal reserve.”

US dollar denominated gold trade to be allowed | News by Thaiger

SOURCE: Chiang Rai Times | Bangkok Post

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1 Comment

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    Toby Andrews

    Thursday, August 13, 2020 at 3:39 pm

    I think I have read this right. Gold can now be bought with US dollars, where before it could only be bought with Thai baht.
    Thailand is afraid the US will accuse Thailand of currency manipulation, which is certainly true if the Thai authorities do not allow foreign currencies to be used for trade in Thailand. This announcement might be to refute that accusation,
    However, at what rate will the Thais allow the Thai baht to be traded for US dollars?
    If this rate is fixed to the advantage of the baht, again this is currency manipulation. I expect this will be the case. They will fix the rate of exchange.
    To counter this, many Thais will find a way around this. Such as buying US dollars in ATMs in Cambodia, which is no problem with foreign accounts, and then smuggling US currency back into Thailand. And they will employ other methods.
    I await notifications of the battles of the both sides with interest.
    Whatever happens the Thai baht seems certain to go down.

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Jack Burton is an American writer, broadcaster, linguist and journalist who has lived in Asia since 1987. A native of the state of Georgia, he attended the The University of Georgia's Henry Grady School of Journalism, which hands out journalism's prestigious Peabody Awards. His works have appeared in The China Post, The South China Morning Post, The International Herald Tribune and many magazines throughout Asia and the world. He is fluent in Mandarin and has appeared on television and radio for decades in Taiwan, Mainland China, Hong Kong and Macau.

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The Thaiger joins forces with Masii to bring you hassle-free Thailand re-entry packages and much more

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The Thaiger joins forces with Masii to bring you hassle-free Thailand re-entry packages and much more | Thaiger

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The Thiager and its sister company Tadoo, have announced they will enter a strategic partnership with the Bangkok-based fintech company, Masii.

Having joined forces with Masii, The Thaiger aims to provide its 6 million-plus monthly users with exclusive deals and packages such as the Thailand re-entry package, comprising of the Certificate of Entry (COE), Covid-19 Travel Insurance and a Covid-19 Test.

Sapir Matmon, of Tadoo, says “This tie-up will allow us to provide our readers with all-inclusive packages specifically designed to make the whole process of coming back to Thailand as simple as possible. And by booking through us, all service fees will be waived – a saving of more than 1,000 Baht. We’re confident you won’t find a better price in the market right now.”

The Thaiger joins forces with Masii to bring you hassle-free Thailand re-entry packages and much more | News by Thaiger

“We can provide everything you need to enter Thailand hassle-free and within 12 hours, which is the fastest in the market.” Says Maxwell Meyer, CEO of Masii.

Covid-19 has drastically accelerated the industry’s movement toward shifting products and services online.

Sapir says “We are tremendously pleased to welcome the Masii team and work alongside Maxwell, as one of the stars of the local fintech scene.”

Tadoo, The Thiager’s sister company, has also teamed up with Masii on their Thai price comparison platform, tadoo.co, which offers a similar range of products including, insurance, finance, internet, and mobile.

The goal of Tadoo is to bring clarity to the Thai market and assist consumers in making better-informed choices by offering a quick and convenient solution for getting the products they want without the hassle.

For more information on the Thailand Re-Entry Full Package, click HERE.

The Thaiger joins forces with Masii to bring you hassle-free Thailand re-entry packages and much more | News by Thaiger

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Aviation authority calling for 20,000 vaccine doses for crew, ground staff

Maya Taylor

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Aviation authority calling for 20,000 vaccine doses for crew, ground staff | Thaiger
PHOTO: Christian Junker on Flickr

The Civil Aviation Authority of Thailand is calling for vaccine doses to protect around 20,000 airline crew and ground staff before the country re-opens to international tourists. The CAAT says it’s vital that those working in the aviation industry are protected and has submitted its request to the Centre for Covid-19 Situation Administration.

According to Suthipong Kongpool from the CAAT, there are around 20,000 airline employees, including crew and ground staff, who will need to be vaccinated. As 2 doses are required, a total of 40,000 doses are needed to fully protect staff. The Bangkok Post reports that the CAAT will meet on Thursday to review the aviation sector’s readiness for when the country re-opens without international arrivals having to quarantine.

Suthipong says they are seeking enough vaccine doses to protect employees of Thai-registered carriers.

“It’s a confidence-building measure for tourists and those providing the services to them.”

From July, the southern island of Phuket will be the first part of the country to waive quarantine for vaccinated international arrivals, subject to 70% of local residents being vaccinated. The “sandbox” project is a pilot programme that will be expanded to other areas if it proves successful. Between October and the end of the year, 5 other provinces – Phang Nga, Surat Thani, Krabi, Chon Buri, and Chiang Mai – are expected to adopt the programme. Officials hope to be able to re-open the country fully from January 2022.

According to the CAAT, the first foreign visitors expected to return to Phuket will be Chinese tourists, given that country’s success in managing the pandemic. Meanwhile, the CAAT says Thailand will see a 7% increase in air traffic this month compared to last, with a total of 36,150 domestic and international flights.

SOURCE: Bangkok Post

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Labour union angry over changes to Thai Airways staff contracts under rehab plan

Maya Taylor

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Labour union angry over changes to Thai Airways staff contracts under rehab plan | Thaiger
PHOTO: Wikimedia

Union representatives are questioning changes made to the employment terms of Thai Airways staff as part of the national carrier’s debt-restructuring plan. The labour union claims the changes have removed or diluted several staff entitlements and welfare benefits, pointing the finger at acting president, Chansin Treenuchagron, who signed the orders.

The union is calling on the Department of Labour Protection and Welfare to review the changes to check if they align with a debt-restructuring plan submitted to the Central Bankruptcy Court. According to a Bangkok Post report, the union believes the signed orders may go against the terms of the rehab plan currently being reviewed by creditors. They include an order related to the company’s new organisational structure, as well as the screening of workers who will continue to be employed by the carrier during and after the rehab process.

Union representatives accuse the airline of changing the terms and conditions of employee contracts, meaning weaker welfare benefits. They are asking the DLPW to confirm if the changes comply with the 1940 Bankruptcy Act, the 1975 Labour Relations Act, and the 1998 Labour Protection Act. The union says that if the changes are found to violate the acts, Chansin should be ordered to cancel the orders and draw up new employment terms that comply with the airline’s rehab plan and with employment law.

SOURCE: Bangkok Post

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