The baht's value is projected to appreciate in the medium to long term because of slower interest-rate normalisation in the US and adverse effects from the US-China trade dispute, says the Federation of Thai Capital Market Organisations (Fetco).
Capital flows are expected to return to emerging markets in the next few months as the US economy suffers the double whammy of a slower pace of rate hikes and weaker growth momentum caused by the trade spat, said Fetco chairman Paiboon Nalinthrangkurn.
The anticipated developments will cause the dollar to depreciate, Mr Paiboon said.
Foreign fund flows are expected to move into the domestic bond market, he said, as there were net inflows worth about 190 billion baht registered last year in Thai bonds.
Investment projects in the Eastern Economic Corridor and the upcoming general election are positive factors boosting investor confidence, Mr Paiboon said.
The local currency's value is forecast at 32-33 against the greenback this year, according to Fetco.
Nonetheless, the baht is likely to experience a short-term depreciation as a result of lower growth in tourism and exports and higher merchandise imports, Mr Paiboon said.
The local currency's value on Thursday rose to a seven-month high of 31.91 against the dollar, up 1.8% year to date, according to Reuters.
Bank of Thailand governor Veerathai Santiprabhob said domestic demand will be the pillar supporting Thailand's economic growth as external growth drivers play a lesser role this year.
The outlook will result in a lower current account surplus for Thailand, alleviating pressure on the baht, Mr Veerathai said.
For the Thai stock market in 2019, high financial volatility is expected to continue amid several uncertainties, but the general election will provide a boost of confidence for investors, said Prinn Panitchpakdi, country head of CLSA Securities Thailand.
"The stock market is projected to peak before the election," Mr Prinn said. "There will be an uncertainty in domestic politics after the election, as it is anticipated that no political party would take a majority of the vote."
The Stock Exchange of Thailand index is forecast at 1,782 points by year-end 2019 and 1,682 at the end of the first quarter, according to the Investment Analysts Association.
In related news, Fetco's investor confidence index for the next three months declined for a third straight month, by 5.3% to 92.75.
The confidence of retail investors dropped into bearish territory and a 39-month low.
An index below 80 points is considered bearish, 80-120 is neutral and over 120 is bullish.
Investors are concerned about risks from US trade policy and fund flow movements driven by rising interest rates, Mr Paiboon said.