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2 Nov, 2023 12:26

Thailand’s central bank proposes dropping dollars in trade

The regulator has called for the use of local currencies to mitigate the US currency's volatility
Thailand’s central bank proposes dropping dollars in trade

The Bank of Thailand supports the use of local currencies instead of the US dollar in trade with international partners, according to the regulator’s deputy governor for monetary stability, Alisara Mahasantana.

The official said that use of local currencies should minimize the risk posed by fluctuations in the US dollar, which have recently reached 8-9%.

Alisara highlighted that the goal of the move is to provide an alternative for Thai businesses to pay for goods and services.

“During periods of significant dollar volatility, business operators can opt to use these local currencies for payments instead. This reduces the risk associated with exchange rates, making trade negotiations easier,” she explained.

In August, Indonesia, Malaysia, and Thailand signed a tripartite agreement to promote the use of local currencies in bilateral transactions. The deal is aimed at boosting trade through accessible and efficient local currency settlements, according to the joint statement issued by the central banks of the three countries.

Earlier this year, media reports emerged that the Association of Southeast Asian Nations (ASEAN) was planning to discuss dropping the US dollar, euro, yen and pound sterling from transactions and moving to settlements in local currencies.

The recent global shift to national currencies has been partially attributed to the policies of secondary sanctions that Washington is pursuing.

The move to de-dollarize trade intensified in the wake of the sweeping sanctions introduced by Western nations against Russia, one of the world’s major energy producers and exporters, over its military operation in Ukraine.

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