Product details

The abundant natural resources and the agricultural advantage were the major factors that supported Thailand''s economy before the 1970s. Later, as the demand for agricultural products decreased,Thailand started developing an export-oriented manufacturing sector. International trade with the United States and Japan increased. In 1984, Thailand''s currency, baht was pegged to a basket of currencies and 80% of the basket was dollar denominated. During 1996-1997, increase in foreign investment and borrowing, appreciation of the US dollar, and speculation in the currency market led to overvaluation of the baht. In July 1997, Thailand floated the baht, which resulted in a 15% devaluation. This affected the trade and investment sectors of the country. The devaluation helped Thailand to improve its trade with Japan, the US, the European Union and the Association of Southeast Asian Nations (ASEAN). This case helps to discuss the reasons that led to the devaluation of the baht and the relation between the exchange rate and foreign trade of Thailand. A structured assignment ''204-042-4'' is available to accompany this case.