SINGAPORE: The Thai baht rose on Wednesday, fueled by demand from offshore funds as the country's main stock market index hit a 19-year peak while the central bank said it expects capital inflows to continue.
The baht rose 0.2 percent to 29.73 per dollar as of 0454 GMT amid equity-related demand. The Thai stock market index reached its highest level since January 1994.
"The baht could test its Feb. 6 high of 29.68. I just sense that offshore funds are still waiting to buy it," said a trader at a Thai bank.
This year, the Thai currency has been the best performing emerging Asian currency with a 3.0 percent gain against the dollar, according to Thomson Reuters data.
Earlier on Wednesday, the Bank of Thailand released minutes of a Feb. 20 meeting of its Monetary Policy Committee, which said that capital inflows are expected to continue. Risks to financial stability warrant close monitoring, the minutes added.
The comments spurred some caution over potential intervention to stem the baht's strength, but analysts and traders said it is unlikely there will be actual dollar purchases by the central bank for now.
Saktiandi Supaat, head of FX research for Maybank in Singapore, said he sees an increasing chance of intervention "but I don't think the BOT will intervene around the current levels. It could come around 29.50."
A foreign bank trader said it may be difficult for Thai authorities to prevent further gains for the baht, given the country's infrastructure investment plans.
The government is about to finalise plans for a 2.2 trillion baht ($73.8 billion) infrastructure programme.
Some traders also said there are hurdles to the baht strengthen further at present such as demand for dollars by importers.
The baht has been in a tight range between 29.69 and 29.84 so far this month.
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