The Thai baht managed to rise along with several Asian currencies on Wednesday, despite expectations that its central bank will leave its policy rate unchanged at time when the US Federal Reserve is expected to begin raising interest rates.
Investors are expected to scour US inflation data out later this week for any clues on the pace of Fed's policy tightening.
Analysts polled by Reuters expected Bank of Thailand policymakers meeting on Wednesday to hold the one-day repurchase rate at an historic low of 0.50% to support the economy's recovery from a virus-led disruption.
Pipat Luengnaruemitchai, an analyst with Kiatnakin Phatra Securities said in a note that the Thai central bank could find maintaining an accommodative monetary policy too "binding" as inflationary pressures build.
The baht rose for a second successive day, gaining as much as 0.2%, as did the South Korean won and Indonesia's rupiah.
"The USD has lost some ground in general today, allowing Asian currencies to broadly trade firmer," Mitul Kotecha, a senior strategist with TD Securities said.
"While higher US real yields will likely limit any USD weakness, we continue to think Asian currencies will remain relatively resilient compared to other G10 and EM currencies."
The benchmark US Treasury yield on the 10-year note reached 1.97%, its highest since Nov. 7, 2019, as investors await inflation data on Thursday.
Meanwhile, South Korean shares rose about 1%, helped by a tech rally on Wall Street aiding risk appetite.
Other Asian equities also climbed.
Malaysia shares rose 1.1%, leading gains amongst Asian equities, as a Reuters poll showed the country's economy likely bounced back to growth in the final quarter of 2021, propelled by strong exports and private investments.
Thailand and Jakarta stocks were up 0.9% and 0.6% respectively.
India's blue-chip NSE Nifty 50 index also saw a 0.8% rise as investors in the country look forward to the Reserve Bank of India's monetary policy decision due Thursday.
** Indonesian 10-year benchmark yields are up 0.7 basis points at 6.503%
** Top gainers on the Thailand's SETI include TWZ Corporation PCL up 10%, Thai Capital Corporation PCL up 8.93%, Lalin Property PCL up ?5.56%
** Straits Times index up 0.14%