The baht appreciated to a nine-month high of 32.65 against the dollar on Friday before the Lunar New Year weekend. The currency strengthened further on Monday, hitting 32.60 at one point. In October, the baht fell close to 38.50 -- a 16-year low.

The Thai currency gained 5.8% since the start of the year, while the Korean won, Indonesian rupiah and Malaysian ringgit have each moved by just under 3%.

Investors have been buying the baht as tourist spending in Thailand has steadily recovered and increased the country's current account surplus. "We stay optimistic on the baht as the rapid China reopening is likely to benefit Thailand from a tourism perspective," said an analyst at Malaysia's Maybank.

"Thailand is seeing an uptrend for tourism, and if we see more surplus on our current balance, that would strengthen the baht," said Sornchai Suneta, chief investment officer at Siam Commercial Bank.

While the return of Chinese tourists to Southeast Asian destinations has been more of a careful trickle than a pent-up flood, Thailand was the most searched destination for Chinese users on online travel websites Agoda and Trip.com.

The University of the Thai Chamber of Commerce expects holiday spending to generate 45 billion baht. Tourism recovery during the Lunar New Year has encouraged investors.

Although emerging markets in Asia saw net outflows in 2022, investors picked up Thai bonds amounting to $1.04 billion, according to Refinitiv data in December, likely in anticipation of Beijing dropping stringent pandemic travel controls. The Thai government expects at least 5 million Chinese arrivals this year compared with 11 million in 2019.

The recovery is expected to continue in 2023 as investors assume the dollar will begin to weaken and the U.S. Federal Reserve eases rate hikes, while two or three rate hikes are expected from the Bank of Thailand this year. The central bank's monetary policy committee, which meets on Wednesday, raised rates 0.25 basis points at each of its last three meetings.

"In just a few days we're already seeing 60 billion baht in the bond market and tens of billion in the stock market," said Sornchai. "I don't think this inflow will go away, so the direction is that the baht will appreciate."

The Stock Exchange of Thailand has gained 8.47% in the six months since COVID entry requirements were dropped. Hospitality, health care, transportation, retail, and food and beverage stocks are expected to be top performers. Domestic consumption has also received a boost from a tax deduction on goods and services, which ends mid-February.

JP Morgan predicts the SET to hit 1,800 points by yearend, while SCB forecasts a more conservative 1,750. The index opened up 3.2% to 1682 on Monday.

Although the Thai Federation of Industries has been alarmed by the fast-appreciating baht's pressure on exporters, SCB analysts say exports will be shielded as China's reopening reduces the risk of an export slowdown.

Headwinds for the Thai economy remain political and fiscal. An election due by May 7 is likely to result in no single party winning a clear majority, leading to prolonged coalition negotiations. While past campaign spending has sent the SET rallying 5% to 6% in the months before election day, it took 438 days from the 2019 election for parliament to seat a prime minister.

Stock market liquidity may also fall on the return of a long-suspended tax on financial trades. A 0.055% levy on the sale price of securities is expected to go into effect in May, then double to 0.11% in 2024.