The stronger dollar has weakened the Bank of Thailand's international reserves, but the central bank says the country's external position and financial stability remain strong.
The bank's foreign reserves declined to US$240 billion from $278 billion at the beginning of this year. The decline was not the result of support measures for the baht, but rather the valuation of reserve assets in multiple currencies that were converted into dollars.
The stronger dollar meant the valuation of multiple-currency assets in dollar terms declined, said the central bank.
Daranee Saeju, senior director for financial markets at the Bank of Thailand, said the continued appreciation of the dollar had a similar effect on the international reserves of many countries.
She said the Bank of Thailand's foreign reserves remain in solid condition at $240 billion, representing 48% of the country's GDP, with the total ranking 12th globally.
The reserves are three times higher than the country's short-term offshore debt, Ms Daranee said.
The global money market has been highly volatile because the US inflation rate remains at an elevated level. As a result, investors expect the US Federal Reserve to increase its policy benchmark rate for its next few meetings.
On a year-to-date basis, the dollar has increased by 14.6% against the baht and continues to pressure regional currencies, she said.
Ms Daranee said there are no signs of unusual foreign capital outflows from the Thai market.
Year-to-date foreign investors have bought around 160 billion baht of Thai assets -- more than 160 billion baht in stocks and small sales of around 700 million baht in bonds.
Somprawin Manprasert, chief economist at Economic Intelligence Center (EIC), a research unit under Siam Commercial Bank, forecast the baht to strengthen gradually against the greenback, in line with the Thai economic recovery.
The EIC predicts the baht to be in a range of 35-36 baht against the dollar by year-end, rising to 33.5-34.5 at the end of 2023.
Tourism income as more foreign tourists arrive will support the country's current account, returning it to a surplus position later this year, he said.
Foreign capital is expected to flow into the Thai bourse, according to the EIC.
Thailand's inflation rate should gradually decline in the fourth quarter this year, decreasing faster than inflation in the US, said Mr Somprawin. These factors should support the Thai economic recovery and a stronger baht, he said.