Her comments came as Kasikornbank estimated the baht would reach 35 to the US dollar next year.

Tarisa said that despite the stability of the baht's movement yesterday, it still appreciated in value, because of further weakening of the US dollar following lower-than-expected economic figures and negative factors affecting the US real-estate sector.

The baht opened at Bt36.75-Bt36.78 to the dollar yesterday before strengthening to a peak of Bt36.72, its highest point in six years and 10 months. It closed at Bt36.76-Bt36.79.

Tarisa said the central bank was still watching short-term capital flows into the stock market as well as other short-term financial instruments.

Her comments came after the central bank intervened on several occasions over the past week to reduce baht volatility.

Songpol Chevapanyaroj, head of Kasikornbank's capital-market operations, said yesterday that the baht would appreciate more than had been expected.

The bank has revised its forecast for this year from between Bt37 and Bt39 to the dollar to between Bt36.50 and Bt37.50. Next year's forecast has been adjusted from between Bt37 and Bt38 to the US dollar to Bt35.

He said the dollar was expected to depreciate further and regional currencies expected to be stronger.

With a more stable political environment, the Thai economy is recovering, so there should be more capital inflows.

Songpol said so far this year, the baht had appreciated 4 per cent higher than the won and Singaporean dollar, 10 per cent higher than the yen and the Hong Kong dollar and 8 per cent higher than the yuan.

He warned importers and exporters to hedge for foreign-exchange risk.

Anoma Srisukkasem,

Somruedi Banchongduang

The Nation