"The ministry has only one objective, which is to manage public debt efficiently. We are not trying to manipulate exchange rates," said the official who asked not to be named.

The ministry can buy currency on the spot market or futures market. It can also swap foreign debt and hedge against exchange risks.

"We know that our currency trading could wildly affect the exchange rate of the baht given the small scale of the forex market. Therefore, we have tried to avoid taking any action that could influence foreign-exchange rates," the official said.

To manage foreign debts without putting pressure on the forex market, the ministry does not buy a great amount of foreign currency in a single transaction, the official said.

Caretaker Finance Minister Thanong Bidaya and his predecessors have never intervened in debt-management operations, the official said.

Public foreign debt started to rise in the late 1980s and soared after

the 1997 financial crisis. A high level of private foreign debt has been identified as one factor that triggered the baht debacle. The Bank of Thailand's all-out defence of the baht at that time was also identified as a key contributor to the currency's crash.

Public foreign debt as of March remained at Bt554.56 billion, while total public debt was Bt3.22 trillion or 41.44 per cent of gross domestic product. According to the World Bank, Thailand's foreign debt in 2004 was equivalent to 32 per cent of GDP. Most of the foreign debt is in US dollars or yen.

The US dollar closed on Friday at Bt38.15, down from Bt38.40 at Thursday's Asian close.

Wichit Chaitrong

The Nation