He acknowledged that inflows to Thailand in the past weeks have driven up the baht value.

He noted that the appreciation hurts exporters, particularly those in the food industry which operates on small margins. The impacts will be huge for those relying on locally-sourced raw materials.

He said that the strong baht effect would be felt the most during September and October, the period when Thai exporters usually receive the biggest chunk of their annual orders.

At 5.31pm, the baht stayed at Bt34.68 per dollar, gaining 0.77 per cent from the previous month. It gained over 3 per cent in the past 12 months.

According to the Bank of Thailand, the Kingdom attracted foreign funds worth nearly US$6 billion in the first seven months of this year.

On Wednesday, it traded at 1,179.50 per US dollar, after bottoming out at 1,311 last December.

“The currency strength was driven by the positive sentiment on Myanmar (due to improvement in the political environment and continued economic reform), which has attracted foreign direct investment (FDI) into various sectors of the country, especially oil and gas, transportation and communication,” Alvin Liew, a UOB economist, said in a research note.

Among Asean currencies, the kyat was the best performer. Based on Tuesday’s closing rates, it had appreciated 10.7 per cent, second only to the Japanese yen, which went up by 14.9 per cent year to date.

The Malaysian ringgit rose 8.3 per cent, followed by the Singapore dollar’s 5.3 per cent, Indonesian rupiah’s 5.1 per cent and Thai baht’s 2.3 per cent.

FDI hits $9.48 bn

According to data from the Directorate of Investment and Company Administration and the Ministry of National Planning and Economic Development, FDI into Myanmar reached a recent high of US$9.48 billion (Bt332.7 billion) in fiscal 2016 ended March, while it was $8.1 billion in fiscal 2015 and before that, $4.1 billion in fiscal 2014.

Based on a national economic development plan, Myanmar is aiming to attract $140 billion in FDI from 2016-30. And with the US formally easing sanctions in May via the elimination of financial and trade embargoes, that should further enhance FDI to Myanmar.

The kyat might depreciate this half year as a result of rate hikes in the United States.

However, that could be offset by continued FDI inflows and the kyat could either remain at this level or appreciate.

The kyat is expected to end the year at 1,150 and stay there next year.

In this scenario, the trade and current account deficits are also expected to narrow as the country stays on its economic growth path and that will be supportive of the domestic currency.

“That said, there remains a lot to be done within the domestic economy to improve competitiveness while an increasing government budget deficit needs to be better managed,” Liew said.