Bank of Ayudhya, which markets itself as Krungsri, predicts the baht will be more volatile amid several uncertainties both internal and external.
The baht is expected to move in a range of 33.50-36.25 to the US dollar in the third quarter this year, depending on the movement of the US federal funds rate, said Roong Sanguanruang, senior vice-president for global markets and research.
The monetary policy direction of the US Federal Reserve will be a key factor affecting the baht as well as other currencies worldwide.
Krungsri predicts the Fed will either keep its rate unchanged or hike it once by a quarter percentage point for this cycle.
Last month the bank expected the Fed would maintain its policy rate during its meeting on June 13-15 to assess the impact on economic activities and inflation trends, following its most recent interest rate hike, said Ms Roong.
In addition, the economic recovery of China has fallen short of expectations, which is also likely to affect the baht's movement, according to Krungsri.
The yuan correlates closely with the baht when compared with other Asian currencies because of increasing trade and tourism exposure between the two countries, she said.
Expected economic stimulus measures from a new Thai government mean Krungsri is predicting the Bank of Thailand's Monetary Policy Committee will continue hiking its policy rate this year by a quarter percentage point to 2.25% at its meeting next month in an effort to curb inflation.
While the direction of US interest rates is the leading indicator of the baht's value, Thailand's political uncertainty is making the currency more volatile in relation to the greenback as the country is in the process of forming a new government.
In the first half of this year, the baht depreciated in tandem with other currencies in the region.
The baht's volatility against the greenback this year ranked in the middle compared with other currencies in the region.
The baht depreciated by 1.07% against the dollar, while Indonesia's rupiah was down by 3.84%. Malaysia's ringgit shed the most, weakening 5.36% against the dollar to hit its lowest level since January.
Hirotaka Kuroki, head of Krungsri's global markets group, said the bank recommends business operators hedge against the risk of foreign exchange fluctuation through Krungsri's foreign exchange (FX) digital platform.
The company introduced the FX@Krungsri platform yesterday to simplify management of foreign exchange and interest rate risks.
Clients can access the FX@Krungsri platform via the bank's two mobile apps -- KMA Krungsri app and Krungsri Biz Online -- and trade up to 28 currencies from 6am to midday at special rates.