The Bank of Thailand has announced a cautious approach to foreign exchange policy and the need to find a balance for monetary policy in tackling inflation and preventing an asset bubble.
Governor Prasarn Trairatvorakul said the central bank would intervene less in the foreign exchange market but would take action if the baht has unusual short-term transactions.
The central bank expects increased interest among companies to invest abroad amid regional economic integration and greater liberalisation of fund flows that are expected to counter the baht's appreciation.
Although the baht's appreciation has hit certain business sectors hard, the upward trend will help Thai companies' purchase of assets abroad at a lower cost.
It will also help lift the country's economic competitiveness overall, Mr Prasarn said.
"Thai companies' mood for investing abroad has improved. Exports are not the only side to consider when it comes to the baht. And we need to look beyond today to see whether the currency's value now can help the country's competitiveness in the future," Mr Prasarn said in his 2013 annual policy announcement.
He said the baht advanced rapidly in the first two weeks of this year relative to regional currencies, but its appreciation was at only 3% since the beginning of 2012, less than the South Korean won, the Philippines peso and the Malaysian ringgit.
Investments by Thai firms and individuals in both real and financial assets abroad totalled $20 billion in the first 11 months of 2012, almost equal to the amount of foreign investment in both types of assets.
The central bank let the baht move more freely in line with market forces last year, Mr Prasarn said.
"An action that goes against market forces risks failure eventually, but we aren't content with a laissez-faire market either," he said.
Mr Prasarn said monetary policy in 2013 would focus on balancing the goal of nurturing economic growth and risking an asset bubble.
The Monetary Policy Committee reduced the policy overnight interest rate by a quarter percentage point twice last year _ early in the year to aid the economy's recovery from the flood and at the end of the year to cope with uncertainty in the world economy.
The reductions brought the policy interest rate to 2.75%, which is lower than the inflation rate.
"The setting of the policy interest rate to remain low for too long might result in the private sector's excessive debt creation or stimulate depositors to invest more in risky assets and lead to financial instability or an asset bubble in the future," Mr Prasarn said.
He also said inflationary pressure was a signal that the central bank might not advocate the MPC to increase the policy interest rate increase either.
He said firms should cope with the increase in the minimum wage to 300 baht with internal structural changes rather than by increasing prices.
Mr Prasarn said risks to economic growth had reduced from last year as the world economy showed clear signs of gradual recovery.
The domestic economy would be the major driver of growth this year, boosted by the government's stimulus measures and export improvement in the second half of the year.
The central bank is expecting economic growth of 4.9% and inflation of 2.8% this year.
It will continue to relax foreign exchange regulations and announce guidelines for a new banking licence to foreign investors this year.