The BOT Relaxes Foreign Exchange Controls for Business
The BOT (Bank of Thailand) has announced a further relaxation of the country's foreign exchange regulations, to allow for easier capital movement and easier hedging of currency risks.
In a notice, the BOT said the changes will "drive the new FX ecosystem" and "solve the structural problems of the Thai forex market", while also increasing the convenience and 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.
Firms will also be allowed to manage their foreign exchange risk exposures through hedging transactions more freely, particularly for commodities that are quoted on global markets. Previously, permission was required on a case-by-case basis.
Hedging on behalf of other affiliated companies residing domestically, hedging in anticipation of foreign exchange revenues or expenses with tenors longer than one year, and hedging of balance sheet exposures will also be allowed.
"This would enable exporters, importers and those in the supply chain to better manage their foreign exchange risks more efficiently without having to request for prior approval from the BOT," the central bank said.
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, provided they have undergone the bank's KYB process.
"This would help reduce the cost and burden in preparing documents and facilitate foreign exchange activities conducted through online channel," the BOT said.
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