The baht yesterday gained 0.1 per cent to 31.93 per US dollar thanks to continued fund flows into the equity and bond markets, after the US Federal Reserve Board's decision to maintain its Fed Funds Rate and Thailand's posting of export growth of 30 per cent in the first half.
Bandid Nijathaworn, deputy governor of the Bank of Thailand, said the stronger baht would not handicap exports.
"The country's exports have done quite well in the first half even as the baht has risen to date by 4.3 per cent. The 30-per-cent export increase in the first half showed that the stronger baht had no impact," he said.
Importers will benefit from cheaper raw materials and this should also spur domestic spending, he said.
The stronger baht will reduce inflationary pressure to some extent, he said, adding that the central bank would closely monitor the fund flows to prevent asset price bubbles and ensure that the foreign-exchange rate is not so volatile that it disrupts business activities.
Pornthep Jubandh, an economist at Siam Commercial Bank, attributed the money pouring into Thailand and the rest of Asia to the Fed's decision to hold the rate at 0-0.25 per cent.
As the dollar weakens while Thailand's trade surplus grows, the baht will continue gaining, he said.
Siam Commercial Bank's treasurer said it was likely that the baht would hit 31.75 per dollar next week, on expectation that Thailand's policy rate would be raised by 25 basis points.
Apaporn Sawangpak, research director of DBS Vickers Securities (Thailand), expects more fund flows into Asia because of the wider interest-rate gap.
However, because of the lack of positive investment factors besides better-than-expected quarterly results, much of the offshore money goes to the bond market.
The investment environment should pick up if the government can solve the Map Ta Phut crisis and ensure political stability, she added.