For Thailand’s Covid-hit economy, all that glitters is not gold as baht rallies

Surging sales of the precious metal are complicating the government’s bid to rein in the baht

Bullion traders expect the trend to continue into 2021 as the coronavirus drags on tourism and manufacturing

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A customer at a gold shop in the southern Thai province of Narathiwat. Photo: AFP

Published: 4:01pm, 29 Dec 2020Updated: 1:52pm, 30 Dec 2020

Gold sales in Thailand are surging as households reach for a financial lifeline amid the pandemic, a tactic that risks complicating government efforts to tame an export-stifling rally in the nation’s currency.

Exports of the precious metal surged to a record this year as prices climbed and Thais unloaded jewellery, bars and medallions to raise cash for routine expenses. Bullion traders expect the trend to continue into 2021 as the coronavirus drags on tourism and manufacturing, the mainstays of Thailand’s economy.

“Gold is easier to sell than land or condominiums,” said Pawan Nawawattanasub, chief executive officer of YLG Bullion International, one of Thailand’s top gold traders. “Thai people still have high stockpiles of gold, as the nation has been more of a net importer than exporter in the past.”

People sell their jewellery in a gold shop in Bangkok's Chinatown. File photo: AFP

Quick cash from more than 1,800 gold shops across the nation has been one of the most common ways Thais have weathered the economic downturn, in addition to taking out short-term loans, skipping debt payments and finding second jobs.

As a result, gold exports jumped to 237.4 metric tons during January-October, compared with 170 tons for all of 2019, official data show. Net exports of 135 tons during the first 10 months of this year are the highest since at least 2010, according to Ministry of Commerce figures.