Bank of Thailand, Bangkok. Photo: Reuters / Jorge Silva

Thailand’s central bank has threatened to investigate financial institutions for baht speculation as the local unit climbs over 2% against the US dollar so far this year, making it Asia’s second best performer to date.

Bank of Thailand governor Veerathai Santiprabhob said that some financial institutions’ behavior may indicate involvement in baht speculation through heavy transaction volume, according to a report Thursday in the Bangkok Post. Regulators need to launch an in-depth examination of the activities, he said, and consider tightening the rules to thwart speculators. He did not specify which institutions were suspected.

The announcement comes amid fears that a rapidly appreciating baht could put a damper on a desperately needed recovery in exports, and defuse the ruling junta’s bid through ramped up fiscal spending to orchestrate an economic boomlet ahead of elections.

Despite the warning against baht speculation, Veerathai has also said repeatedly that the currency’s rise was in line with the global trend of dollar weakening.

The dollar fell to a three-year low against the euro earlier this month.

“We still think the dollar is probably going to be relatively soggy, at least against the majors, probably against the emerging economies to a significant degree as well,” Jan Hatzius, chief economist at Goldman Sachs, told CNBC earlier this month.

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