Thailand has received significant attention for the last ten years and is currently among the emerging markets. A substantial growth of the Thailand economy took place in a recent few years. Currently, investors across the world are keenly observing and understand the upcoming developments across all sectors in Thailand. For at least 6 to 7 years, the Thailand currency has shown significant appreciation trend when compared to the U.S. dollar. Of importance to the paper is to analyze the position of Thai baht against the United States dollar for the period of five years from 2005 to 2010. The Thailand currency is donated by Thai baht and has not been chosen as a global currency due to the stiff control measures by the Thailand government on their currency (Vogel, 2014). The government released its hold with perceptive economic reforms, and since that time, the international trade started flourishing. A review of the economic history between the two followed with a review of the exchange rates has been provided.
There has been a change in the Thailand business practices as a result of various factors that have combined to transform the Thailand economy. These resultant changes in the production strategies and overall costs have led to the divergence of the workforce and the business sector. Thailand has been drawn into the global economy and as such need to compete with the rest of the world for sales of the goods and services available. At the moment, the labor force, once the lowest paid in the world and least respected has been made to compete with the higher-cost labor sources across the globe.
The years 2006-2007 saw the end of boom economics for numerous Americans. New credit policies were implemented which allowed stock and real estate prices to increase significantly. Real estate speculators were expected to execute options on new cooperatives only to flip the contract to another buyer for profit prior to building the property(Aggarwal, 2013). There were numerous forces that collaborated to threaten collapse of the financial markets, from scoundrel traders who made significant bets that further endangered the existence and operation of their organizations, to loss of jobs, to a notable customer mortgage debt and deflation of the housing units, in many instance to values which were below the debts linked to them. Subsequently, the stock markets were diversely affected with massive losses to the extent that stock trading was suspended in various nations across the world for some time.
During 2008, the world currency flees to the US dollar and the Japanese yen which seed to save the haven from currency depreciation across the world. In this case, governments implemented various initiatives to prop up their currencies, manage their security trading and at the same time restore confidence to the markets. Fast forward, the actions took hold and for that reason, the Dow Jones Industrial Average (DJIA) which had long been used in the stock market index in the United States.
Thailand economics are significantly different to the US economic indicators. Thailand has a well-established infrastructure, a free business economy, and steady growth. This is attributed to the industrial and agricultural exports which involve electronic devices, automobiles and parts and processed goods. Moreover, the US and the Thailand financial matters are reliant upon each other. And since every economy is reliant on each other, factors like labor outsourcing from the US to Thailand cannot influence currency deviations. Labor subcontracting from the US to other lower-cost countries like India would, however, have an economic impact, but not in the currency between the US and Thailand.
In the five year chart that covers trading ETF between Thai baht and US dollar indicates the economic situation at the time. During 2007, the US was undergoing through essential growth and output, and for this reason, the currency traders maintained the US dollar relative to other currencies, Thai baht included. When the US economy took hold in 2008, other nations like Thailand whose currency was not severely influenced led to the rise against the US dollar (Muscat, 2004). Furthermore, when the US dollar and the Japanese Yen were seen as safe havens, the Dollar gained significantly against other currencies. When businesses stabilized, the US economy lost its glory and the Thai baht gained against the dollar to a point where they were almost at par during 2008.
In a nutshell, the ETF mirrors the economic scenario of the time and between the two nations. Currencies are often assessed based on the economic situation as a whole, rather than the specific companies or industries in the countries. At the time when the US was considered a safe haven, the dollar was buoyed in contrast to other currencies altogether. This economic transformation in the US economy was partially addressed through an assessment of the economic transition and debt burden which reflected a balance of trade and debt issues. At the same time, there is indeed a close correlation between economic situation of the time and return to standard after economic stress.
Aggarwal, V., & Urata, S. (Eds.). (2013). Bilateral trade agreements in the Asia-Pacific: Origins, evolution, and implications. Routledge.
Muscat, R. J. (2004). Thailand and the United States: development, security, and foreign aid. Columbia University Press.
Vogel, H. L. (2014). Entertainment industry economics: A guide for financial analysis. Cambridge University Press.
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