• ISSN: 2301-3567 (Print), 2972-3981 (Online)
    • Abbreviated Title: J. Econ. Bus. Manag.
    • Frequency: Quarterly
    • DOI: 10.18178/JOEBM
    • Editor-in-Chief: Prof. Eunjin Hwang
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HOME > Archive > 2020 > Volume 8 Number 2 (May 2020) >
JOEBM 2020 Vol.8(2): 114-118 ISSN: 2301-3567
DOI: 10.18178/joebm.2020.8.2.622

Exchange Rate and Capital Flows of Thailand

Santi Termprasertsakul and Prin Seree-amnoui

Abstract—The inflows and outflows of capital are important to Thailand’s economy development. Since the Bank of Thailand loosens the foreign exchange regulation in 2012 together with the political instability in 2013, the pattern of capital flows of Thailand has been changed from net capital inflows to net capital outflows. This paper revisits the impact of capital flows on real effective exchange rate of Thai Baht. We empirically investigate the impact of asymmetric capital flows on Thai Baht, using the Nonlinear Autoregressive Distributed Lags (NARDL) model to capture the asymmetry of capital flows. The monthly data of Thailand’s net capital flows are investigated during 2005-2018 and decomposed into the period of capital inflows and capital outflows. The empirical evidence confirms that an increase in capital inflows causes Thai Baht to appreciate. Also, the NARDL model has an ability to identify the existence of long-run relationship between capital inflows and real effective exchange rate of Thai Baht. However, the long-run relationship between capital out flows and real effective exchange rate of Thai Baht does not exist. The model confirms the impact of asymmetric capital flows on exchange rate.

Index Terms—Capital flows, real exchange rate, asymmetry, NARDL.

Santi Termprasertsakul is with Srinakharinwirot University, Bangkok, Thailand (e-mail: santit@g.swu.ac.th). Prin Seree-amnoui is with Thammasat University, Bangkok, Thailand (e-mail: prin.seree@gmail.com).

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Cite:Santi Termprasertsakul and Prin Seree-amnoui, "Exchange Rate and Capital Flows of Thailand," Journal of Economics, Business and Management vol. 8, no. 2, pp. 114-118, 2020.

Copyright © 2020 by the authors. This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (CC BY 4.0).

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