The baht's value could appreciate to 31.50 against the US dollar this quarter because prevailing global financial volatility is poised to compel investors to seek refuge in new safe-haven destinations, says Kasikornbank (KBank).
The local currency rose to 31.74 against the greenback, an eight-month high, as of Wednesday's press time, according to Krungthai Bank.
The baht's year-to-date appreciation is 2.64%, making it the best-performing currency in Asia, according to Reuters.
Thailand is an emerging-market economy with lower investment risk compared with emerging-market peers, said Kobsidthi Silpachai, head of capital markets research at KBank.
Southeast Asia's second-largest economy is seen as one of the most attractive safe havens based on the country's credit default swap (CDS) ratio of 0.14%, which is lower than that of the US, Mr Kobsidthi said.
A CDS is a financial swap agreement in which the seller of the CDS will compensate the buyer in case of a debt default by the debtor or other credit event.
Thailand also ranks ninth in terms of having the lowest global investment risk, supported by its strong economic fundamentals such as high foreign reserves and sound balance of payments, Mr Kobsidthi said.
"The baht's value could strengthen to 31.20-31.30 against the dollar this quarter and could reach its strongest level on April 19, a period in which the local currency usually appreciates the most based on historical data," Mr Kobsidthi said.
Capital inflows expected in April are attributed to investments and tourism influx, he said.
"Bonds and fixed-income securities in Thailand are still attractive as a result of low inflation and relatively low interest rates," he said. "These factors make net investment return remain positive."
The baht's value, however, is expected to depreciate to 32 in the second quarter as the Thai capital market enters a dividend payment period.
In 2018, SET-listed companies paid dividends to foreign investors of about 87 billion baht.
Kavee Chukitkasem, deputy managing director of Kasikorn Securities, said investors are advised to accumulate domestic equities when the SET index falls.
"The SET index could move along a wide range of 300 points, between 1,400 and 1,700, but we still recommend accumulative purchase because the country has strong economic fundamentals," Mr Kavee said. "By the next three to five years, Thailand will enter into a new investment cycle that could drive the SET index to 2,000 points."
The bourse could, however, decline steeply in the second or third quarters on concerns about the global economic slowdown and withdrawal of monetary stimulus in many countries, he said.