The central bank on Monday decided to allow non-residents with non-speculative transactions in Thailand to conduct hedging or sell-buy swaps.

The relaxation of the 30-per-cent reserve requirement covers their baht-denominated transactions with local financial institutions.

The BOT expects the move will end the recent volatility and narrow the difference in the baht levels between the onshore and offshore markets.

The baht continued to rise against the dollar yesterday, breaking another 10-year record to 33.77-33.78 level, buoyed largely by foreign inflows.

The Stock Exchange of Thailand, meanwhile, continued to ride the bull, and a leading broker forecast that the SET Index could touch the 1,000 mark in the next 12 months.

Making the prediction, Ayudhya Securities said in its report that the stock market had turned "bullish".

The index is likely to test the psychological barrier of 930 to 1,000 points over the next 12 months, thanks largely to the expected economic recovery during the second and third quarters this year.

The SET added 11.81 points to close at 844.19, after touching the resistance point of 850 in the afternoon session.

The BOT said non-residents (NR) wanting to hedge must have underlying transactions and offshore foreign-exchange hedging outstanding before December 19 last year, the day the central bank introduced the withholding reserve requirement of 30 per cent.

NRs must seek BOT approval between July 16 and August 17. Requests received after the deadline will be denied.

BOT director Suchart Sak-kankosone said the relaxation was aimed at lowering volatility of the baht and the swap rate in the offshore market, and reducing non-residents' hedging transaction costs in the offshore market. He expects the gap between the baht's onshore and offshore rates to narrow.