There are no signs of speculation on the baht nor are heavy sales of the dollar to push up the baht value although short-term investment in the local bond market has soared, says Prasarn Trairatvorakul, the Bank of Thailand's governor.
A man looks at a foreign exchange board in Bangkok yesterday. PATIPAT JANTHONG
Existing regulations are already in place to rein in speculation on the baht such as the limit on foreign investment in the local currency without underlying transactions, he said.
Short-term investments in the bond market have increased as investors react to world economic uncertainties.
Foreign investment in the local stock market has declined as the price-to-earnings ratio has increased.
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Foreign capital inflows have reached $2 billion since the beginning of the year, Mr Prasarn said.
"During the past 2-3 weeks, investment in the bond market at the end of each trading day has a balance of selling and buying orders. We haven't seen signs of attacks on the baht or one-way speculation yet," Mr Prasarn said.
However, the central bank would monitor the impacts of the Bank of Japan's announcement to target 2% inflation and to buy financial assets next year.
High-income countries' monetary expansion plans have led to inflows to the Thai economy, Mr Prasarn said.
Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong said baht invention should be avoided even at the expense of exporters.
Instead, Mr Kittiratt has opted for baht-relief measures, saying a meeting with exporters would be set next week.
"The government is considering relaxing the rule that requires them to convert their foreign currency revenue into the baht within a certain period. We might allow them to hold it for a longer period. This will reduce their risk of foreign exchange losses," said Mr Kittiratt.
Over the long term, the government plans to borrow for infrastructure projects in baht, a move that increases imports and reduces pressure on the currency at the same time.
Payungsak Chartsutthipol, chairman of the Federation of Thai Industries (FTI), said his group will meet with the central bank early next week.
The FTI members will meet to discuss the issue of the strong baht today. They are likely to come up with recommendations for the central bank such as requiring reserves from short-term capital inflows.
"Everyone _ the government, the central bank and exporters _ have to take action now amid continuous capital inflows," said Mr Payungsak.
"The baht has appreciated the most among other currencies in Southeast Asia, causing significant impacts on exporters especially those using high local content," he said.
Sanan Angubolkul, president of Srithai Superware Plc, also called on the Bank of Thailand to address the issue, saying the company's exports of plastic and melamine products are hurt.
Srithai exports over 1 billion baht worth of plastics and melamine to over 100 countries. Exports account for 26% of total revenue.
"We are asking the Bank of Thailand to take actions in dealing with the baht to minimise damages," he said.