The baht has been quite stable in recent weeks, as foreign investors' expectation of the currency's rapid strengthening has declined, says the Bank of Thailand.
Governor Prasarn Trairatvorakul yesterday said the baht moved quite naturally in line with economic fundamentals in recent weeks due in part to the flexible foreign exchange system, which played a role in preventing the baht from moving in a single direction.
The baht surged in the first two weeks of the year after a relatively calm period in 2012 during which it strengthened by an average of 3%, less than other regional currencies.
"The baht's movement over the past two months is a good example of the advantage of a flexible foreign exchange system," Mr Prasarn said.
"The economy received a high amount of capital inflows that strengthened the baht in the first two weeks due partly to investors' catch-up movements. But it has become stable the past four weeks.
"Flexible foreign exchange is an automatic breaker. The easing of the baht appreciation came from neither the influence of the interest rate nor the central bank's currency intervention."
Mr Prasarn said capital inflows of US$2 billion this year have barely increased from the same period last year. The inflows concentrated on short-term bonds in the first few weeks of January before shifting to bonds with longer maturity.
The central bank has pushed for continued liberalisation of outward investment by local firms and individuals.
Mr Prasarn said it has been more cautious in intervening in the foreign exchange market, traditionally by buying US dollars and later issuing bonds to absorb the baht's liquidity.
"We currently have $200 billion in foreign reserves compared with $130 billion in external debt. Because of uncertainty in the world economy in which capital flows might reverse, this is the sum of reserve we must keep as a cushion," he said.