Regional financial markets are unlikely to experience shock waves from the surprise move by the Swiss National Bank (SNB) to abandon a three-year cap on the Swiss franc's value against the euro, says a senior Bank of Thailand official.
"The baht's moderate appreciation is in line with the strengthening trend of the yen, which is considered a safe-haven currency, while the issue of capital flows warrants further monitoring," said Chantavarn Sucharitakul, an assistant governor overseeing the financial market operations group.
But she said the SNB decision could spark investor concerns in the short run.
The Bank of Thailand will continue to monitor developments closely in terms of foreign exchange movements and capital flows to maintain stability in the domestic financial market.
The scrapping of the Swiss currency cap rattled global stock markets, but the effect on the Thai bourse was minimal.
Yesterday, the Stock Exchange of Thailand index declined by 0.37% to close at 1,517.74 points in moderate trade worth 37 billion baht. The baht traded at 32.62/32.64 to the US dollar, a bit stronger than 32.75/32.77 on Thursday.
On Thursday, mere minutes after the Swiss central bank said it was abandoning the minimum of 1.20 francs to the euro, the franc soared nearly 30% to 0.851 against the common European currency before easing back to 1.0421.
The impact of the SNB decision on the baht was negligible, as regional markets have thin volume in Swiss francs, one local currency trader said.
Asian currencies, particularly the yen, have seen a sharp appreciation recently due to the spillover effect of investors seeking safe-haven currencies.
The currencies of countries that have significant trade relations with China are seen as stable, the local trader said.
In the trader's view, the baht could move to 32.30 against the US dollar in the coming weeks as further aggressive monetary stimulus measures by the European Central Bank and the Bank of Japan induce capital flow volatility.
The SCB Economic Intelligence Center agreed funds could flow to Thailand, elevating the baht against the dollar.