Bangkok Post

Mr Pongsak said the persistent baht appreciation was caused by investment inflow to make short-term profit by foreign investors, not long-term investment.

As the overseer of monetary policy, the central bank should come up with necessary measures to block such short-term investment inflow, he added.

One measure is to cut its key policy rate to prevent the baht currency from becoming too strong and lowering the trade competitiveness of Thai exporters, which have already been severely affected by the 300 baht daily minimum wage hike, he said.

Mr Pongsak said TCC will reassess the impact of the strong baht next week.

Former finance minister Thirachai Phuvanatnaranubala said on Wednesday that the ongoing appreciation of the baht has created a problem for small and medium enterprises (SMEs),

SMEs had already been affected by the government’s 300-baht daily minimum wage nationwide policy, which took effect on Jan 1, and the stronger baht would worsen the situation, he said.

Mr Thirachai believes the strong baht will become another main risk factor for the Thai economy this year as it could further trim the country’s exports.

The ex-finance minister is confident that the BoT is capable of overseeing the value of the baht.

But intervention in the money market to weaken the currency would increase losses to the central bank.

Moreover, the intervention could be made only at a certain level, he said.

Regarding a call for the BoT to cut the repurchase rate to curb foreign direct investment inflow, Mr Thirachai said the measure would lead to an expansion in domestic lending.

It could also lead to problems of high inflation and household debt, he added.

Payungsak Chartsuthipol, chairman of the Federation of Thai Industries (FTI) said on Jan 19 that the central bank should intervene to ensure the baht moves in line with other regional currencies.

Mr Payungsak was concerned that the strong baht would affect the trade competitiveness of Thai manufacturers, particularly exporters.

The baht has appreciated by 1.2% against the dollar since the start of this year. It gained 3.1% in 2012 after advancing 5% in 2011. The Thai currency has been the second strongest performer in Asia so far this year, behind the Malaysian ringgit which has gained 1.8%.

Finance Minister Kittiratt Na-Ranong conceded that if the baht appreciated much more, it could affect the competitiveness of Thai exports. He contends that the gains do not reflect real demand for the baht.

However, demand is expected to remain very high as foreign funds pour into the country's stock and bond markets in search of higher returns than in developed markets.

Average daily turnover on the Stock Exchange of Thailand has exceeded 50 billion baht since the start of this year, compared with an average of 32 billion in 2012. Foreign funds account for 20% of trade on the local stock market.

It is the duty of the central bank to oversee the short-term baht fluctuations and rapid inflows and outflows of foreign investment, said Mr Kittiratt, who is also deputy prime minister for economic matters.

Central bank governor Prasarn Trairatvorakul admitted that the baht fluctuation was caused by foreign capital inflows to the local bond and stock markets.

He also admitted that there were signs of short-term profit-taking by foreign investors.

However, the baht's movement was in line with those of other currencies in the region and therefore no intervention was taking place at this time, Mr Prasarn said.

Thiti Tantikulanan, head of the capital markets business division at Kasikornbank, projected the baht would appreciate to 29.50 by mid-2013 and further strengthen to 29 baht by the end of the year.