The Bank of Thailand stands ready to implement additional measures to manage the strengthening baht under a targeted policy, on both a short-term and long-term basis.
The central bank's Monetary Policy Committee (MPC) has expressed concerns over the rapid appreciation of the baht as this affects the fragile economic recovery.
"The Bank of Thailand has several instruments to manage the baht. We will consider additional targeted measures and implement them continuously to manage the exchange rate for both the short and long term," said MPC secretary Titanun Mallikamas.
The central bank has continued to manage the movement of the exchange rate reflecting rising international reserves. Thailand's foreign reserves were registered at US$252 billion (7.7 trillion baht) as of Nov 6, up from $249 billion logged on Oct 30.
In 2019, the central bank lowered the cap on the outstanding balance of a non-resident account from 300 million baht per person to 200 million, an attempt to tamper inflows of short-term inflows speculating on the baht.
The US presidential election and progress on a Covid-19 vaccine have induced a risk-on sentiment, subsequently attracting foreign capital inflows to move into emerging markets across the globe, he said.
These developments have caused the baht to appreciate, although the currency has registered a year-to-date depreciation against the US dollar, said Mr Titanun.
The baht has strengthened by 4.3% against the greenback since the last MPC meeting on Sept 23.
The local currency appreciation ranks third after the Indonesian rupiah (5.3%) and Korean won (5.2%).
On a year-to-date basis as of Nov 17, the baht depreciated by 0.6% against the dollar, ranked third for currency depreciation against the greenback after the Indian rupee (-4.2%) and the rupiah (-0.8%).
Amid a severe impact caused by the Covid-19 outbreak globally, particularly between March and May, substantial capital outflows were seen in the Thai stock and bond markets, said Mr Titanun.
The firmer dollar during the period also induced the depreciation of other currencies, including the baht.
Offshore fund flows started to return to the Thai capital market this month.
The seven-member rate-setting panel will closely monitor developments in the foreign exchange market and capital flow movement.
The MPC voted unanimously on Wednesday to maintain the benchmark policy rate at 0.5% to support economic recovery.
Despite the better than expected third-quarter economic performance, the economy is expected to recover slowly and needs support from the loosening policy interest rate, said the MPC.
Since the economic recovery will remain fragile and marred by uncertainties, the MPC wants to preserve the limited policy space to act at the appropriate and most effective time.
The committee will also monitor the adequacy of stimulus measures and various risks, including political uncertainties, progress of protocols for admitting foreign tourists and financial position of businesses and households, in deliberating monetary policy.