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BANGKOK, June 14 (Reuters) - Thailand's central bank expects no major market volatility if the U.S. Federal Reserve raises borrowing costs as that has largely been discounted, the governor said on Wednesday.
The recent strengthening of the baht has been driven by increased foreign fund inflows because of external factors, Thailand's stronger economy and its current account surplus, Bank of Thailand Governor Veerathai Santiprabhob told reporters.
There is also some money invested in Qatar flowing back into Thailand following problems in that country, he said.
The baht traded at 33.91 per dollar at 0434 GMT, near two-year highs.
The Fed is expected to increase interest rates by another 25 basis points at its June 13-14 meeting.
Veerathai also said a reduction in short-term central bank bond supply at weekly auctions had resulted in more foreign funds flowing in longer-dated debt. ($1 = 33.9200 baht) (Reporting by Kitiphong Thaichareon; Writing by Orathai Sriring; Editing by Sunil Nair)