Thailand's international reserves rose at the end of May, quelling fears of a currency crisis.
Foreign reserves rose to $287.5 billion in the week ended May 29, according to data released by the Bank of Thailand (BOT) on Friday.
The reading was higher than $285.6 billion in the week ending May 22 and $287.2 billion in the week that ended April 24.
The Thai baht logged the biggest current-account deficit on record in April at $7.6 billion, triggering concerns of a currency crisis, according to a Wednesday report on The Nation.
Don Nakornthab, the Bank of Thailand's assistant governor of the monetary policy group, eased these worries, saying that energy imports and the government's work in sustaining fuel reserves drove the deficit bigger. He said Thailand would be unlikely to experience a currency crisis like Indonesia, the report said.
This week, Indonesia's rupiah dipped to record lows, prompting its central bank to raise the seven-day reverse repo rate by 25 basis points to 5.5%. The rupiah slumped more than 8% against the U.S. dollar to a record 18,190 on June 8.
Meanwhile, Thailand's central bank does not see the need to raise rates yet despite the risk of rising inflation. Earlier this month, BOT Governor Witai Rattanaporn signaled that the rise in inflation is temporary after benchmark rates were kept at 1% at the end of April.
Official data showed inflation in May slowed, with the consumer price index rising 2.79% year on year, compared with 2.89% in April.
However, on a general trend, growth across Asia is weakening, while inflation continues to grow. Monetary policies are being shaped by the widening gap in foreign exchange. A sustained strength in the U.S. dollar has also driven broad-based weakness across various Asian currencies, according to ING's head of research for Asia-Pacific, Deepali Bhargava.
"Central banks are likely to prioritize anchoring inflation expectations and stabilizing exchange rates, even as growth risks mount," Bhargava said. "As elevated oil prices continue to tilt inflation risks upwards, we expect most Asian central banks to raise rates in the third quarter."
