The Bank of Thailand is not worried about the strengthening baht and will not intervene through policy as it believes the movement of the national currency is due to external factors.
BOT spokeswoman Dr Roong Mallikamas said the recent strengthening was caused by the eaker US dollar.
She said the US market had expected that country’s Federal Reserve to raise the benchmark interest rate in its last meeting but because of lower-than-expected indicators in many sectors, Fed chairwoman Janet Yellen said short-term rates would remain low indefinitely.
Roong said the lower-than-expected recovery in various US economic indicators, such as the employment rate and non-farm payroll, had led the Fed to maintain its current relaxed monetary policy.
She said that since the US benchmark interest rate remained low and the country’s economic recovery was slower than expected, the dollar was weaker and the baht stronger.
Roong explained that when the BOT analysed the currency situation, it did not compare the baht to the US dollar only but also to competing currencies in this region. When that comparison was made, the baht was in the middle level.
According to the BOT website, the baht was trading at 32.35 per US dollar yesterday, which represents an increase of 1.1 per cent from 32.72 on March 3.
For other countries in this region, the Singapore dollar strengthened 2.36 per cent from 1.27 per dollar on March 3 to 1.24 yesterday.
The Indonesian rupiah strengthened 2.22 per cent from 11,590 to 11,332 per dollar in the same period, while the Malaysian ringgit strengthened 1.82 per cent from 3.28 to 3.22. The Philippine peso strengthened 1.05 per cent from 44.71 to 44.24 per dollar.
"The baht did not swing up that much and currency fluctuation is a normal thing," Roong said.
Meanwhile, funds in the portfolios of foreign investors have been on an outflow trend since the beginning of the year but the funds in the Stock Exchange of Thailand have been on a net-buy trend since the beginning of March. As a result, the overall outflow lessened.
As of Wednesday, foreign net buys in the SET were equal to Bt1.726 billion.
As for reserves, Roong said commercial banks should have plenty of "cushions" because in the past 10 years they had made enough profits to have sizeable funds in their reserves and they should be able to cater to customers with ease.
Commenting on China’s falling exports and imports, Roong said this was expected, since the country had been over-invoicing last year, which led to lower export numbers.
She said that even though the downbeat headlines on export and import numbers in China had suggested otherwise, she expected the country’s exports to be better in the coming months thanks to higher shipments to the Group of Three rich economies – the US, the European Union and Japan.