The baht was quoted in a range of 34.80-83 to the dollar in morning trade, against Friday's close at 34.92-93.

The Thai currency broke the 35 barrier on Thursday amid speculation that the Bank of Thailand would end all capital controls introduced in December.

However, Thai officials, including the finance minister, repeatedly stated last week that the government would keep the currency controls but investors bet the opposite, pushing the baht to new highs against the dollars.

"Exporters sold dollars on speculation that the baht would get stronger because of expectations that the capital control rules could be lifted at any time," said Thanyalak Surapol, head of money and banking at Kasikorn Research Centre.

"They are worried that additional measures could be introduced to replace the withholding rules but the baht continued to rise this morning while other currencies didn't move significantly against the greenback," she added.

Thanyalak said Kasikorn Research expected the baht to rise past 34.70 this week, due to negative sentiment on the dollar and the US economy.

The central bank in December introduced stringent currency rules aimed at halting gains in the Thai baht, which has risen nearly 12 percent over the past year.

The rules required 30 percent of all incoming investment to be held by financial institutions for up to one year, sparking a massive stock market sell-off in December with losses of a staggering 23 billion dollars.

Central bank governor Tarisa Watanagase and Thailand's new Finance Minister Chalongphob Sussangkarn have repeatedly said the government would keep the currency measures to rein in the rising Thai baht.

Investors initially cheered Chalongphob's appointment as finance minister since the former World Bank economist had previously come out against the capital controls.

But the new minister disappointed investors by saying Thailand still needed the measures to control the volatile currency.

Agence France-Presse