The Bank of Thailand intervened in the currency market last week in what was believed to be an attempt to prevent the baht strengthening so as to stop export recovery momentum stalling, according to a senior official at Kasikornbank (KBank).
A sign of the central bank's intervention was that the baht was pegged back at no more than 33.80 to the dollar throughout last week, said Kobsit Silpachai, head of the bank's capital market research department.
The currency was trading in a range just shy of 34 to 34.16 between July 3 and 7.
The baht is among the best-performing currencies in Asia, up 5.3% year-to-date against the US dollar.
With a firmer baht, exporters called on the Bank of Thailand to step in to prevent them from taking a hit on exports, which are picking up.
Currency exchange graph via OFX Group.
Exports grew 4% on average in the past 12 months, compared with Vietnam's 15%, Indonesia's 10%, and the Cambodia, Laos, Myanmar and Vietnam (CLMV) market's 12%.
Thai exports jumped 13.2% year-on-year in May to US$19.9 billion (676 billion baht), the highest in more than four years. In the first five months of 2017, exports rose 7.2% to $93.3 billion, according to the Commerce Ministry.
With higher-than-expected growth in exports, the Bank of Thailand this month raised its full-year export growth forecast to 5% from 2.2% and slightly raised the country's 2017 GDP growth estimate to 3.5% from 3.4%.
Kasikorn Research Center also revised up its export growth forecast to 3.8% for the year from 2%.
Exports represent 75% of the country's GDP over the four quarters.
Despite the firmer baht, KBank is maintaining its projection of 34.50 against the dollar at year's end, Mr Kobsit said, adding that the local currency is expected to weaken to 34.20 this quarter.
The country's high current account surplus is the main reason for the stronger baht, he said.
The baht on Thursday firmed to 33.95 to the dollar from Wednesday's 33.96.
Another factor that will have an impact on currencies around the world is the US Federal Reserve's monetary policy, Mr Kobsit said.