The baht rose to 32.95 versus the greenback Thursday, hitting a 30-month high, with Bank of Thailand governor Veerathai Santiprabhob saying the firmer baht is in line with regional peers, driven by the US dollar's retreat.
The dollar is weakening because of uncertainties regarding the US tax reform plan, Mr Veerathai said.
"The baht is strengthening because of the depreciation of the US dollar against every currency, which is an external factor," he said on the sidelines of the Bangkok Post Forum -- "Asean@50: In Retrospect" held Thursday.
"We don't want the public to focus on any specific value, as we use a flexible exchange rate system," Mr Veerathai said.
The baht has risen more than 8% against the dollar so far this year, the second-best performer among Asian currencies after the South Korean won, which has surged 9%.
Separately, Mr Veerathai said in a panel discussion on 20 years after the Asian financial crisis that central banks' challenges include financial stability and technological changes.
The key lesson learned for central bankers after the crisis is that resolution is very difficult and painful, so they must work hard to prevent another from happening again, he said.
The principle of maintaining financial stability is paramount, regardless of changes in the global economic and financial environment, Mr Veerathai said.
"We have to maintain stability and make sure we have proper institutional arrangements to prevent a financial crisis," he said. "When another crisis happens, we should have installed plans to address the resolution of the crisis."
The extended low-interest-rate environment has created search-for-yield behaviour and led to an underpricing of risk, a phenomenon also present in the early stages of the Asian financial crisis, Mr Veerathai said.
"I think central bankers have to emphasise financial stability and be more careful of any sources of financial fragility that could create insecurity in the long term," he said.
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For example, leverage has increased in different parts of the world, especially in emerging markets, he said. The higher leverage is happening to corporations and households, with high household debt a key problem in many countries, including Thailand.
Technological changes are another major challenge for central banks. Financial technology (fintech) has created a new landscape for the banking and financial industries, Mr Veerathai said.
"The role of central bank as bank supervisor means paying more attention to the impact of technological changes on the financial landscape," he said. "There will be new players in the financial system, and obviously you want to promote financial innovation that will improve productivity and lower cost."
Mr Veerathai said new risks such as cyber-risks have also emerged from technological changes and the central bank will have to focus on limiting them.
A panel discussion on 20 years after the Asian financial crisis at the Bangkok Post Forum. (Video by Jetjaras Na Ranong)
Zeti Akhtar Aziz, the former Malaysian central bank governor, said more shocks are going to happen, including more disruption and new geopolitical developments, and those could challenge central banks.
"However, developments since the Asian financial crisis have given me great confidence in Southeast Asian central banks," Mrs Zeti said. "I think we built up institutional memories and policymakers from central banks in the region have built up institutional capabilities to manage through future shocks and crises."
She said one important development is that Asean member countries have been more reliant on an optimal mix of policies across government agencies rather than depending solely on monetary policy.
"When you rely only on monetary policy, you have to over-adjust, such as with interest rates being too low for too long," Mrs Zeti said.
Since the crisis, better surveillance was put in place, financial intermediaries became stronger, more developed financial markets were built with flexible exchange rates to absorb shocks, and central banks created more mechanisms and gained more power to deal with instability, she said.
Asean countries also became more integrated and central bankers shared more information among themselves to better address crises before they happen, Mrs Zeti said.
Anutin Charnvirakul, owner of Sino-Thai Engineering and Construction Plc, said Thai corporations learned a lesson from the crisis and built a strong foundation while becoming more disciplined in their business conduct.
"These lessons learned helped strengthen the Thai economy, making it resilient to crisis," Mr Anutin said. "Despite years of political turmoil, the economy still remains strong."
He said the upcoming general election should help strengthen investor confidence and help the economy grow even stronger.