Economic Factors and COVID-19 Pandemic Influencing Exchange Rate of Baht against U.S. Dollar in the Short-run and Long-run
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Abstract
The purpose of this research was to investigate the Influencing of economic variables and COVID-19 pandemic on Exchange Rate of Baht against U.S. Dollar in the short-run and long-run in two periods: (1) Before the COVID-19 (January 2014 - December 2019) and (2) During the COVID-19 (January 2020 - Apirl 2023) and analyzed the influence of the independent variables by Co-integration model (long-run model) and Error Correction Model (short-run model).
The findings indicate that (1) before the COVID-19, both in short-run and long-run, exchange rate of Baht against U.S. dollar was influenced by interest rate gap between Thai and US, Thai money supply, international reserves, and public debt, (2) During the COVID-19, in short-run, Baht against U.S. dollar was influenced by interest rate gap, international reserves, and COVID-19 death rate in Thailand. But in long-run, the sharp increase in Thai government debt has led to a Baht Depreciation. This reflects that, although public debt during crisis may be inevitable, Thai government must manage public expenditures in a way that maximizes their effectiveness in supporting economic recovery, while simultaneously administering international reserves to ensure resilience against potential future economic crises, thereby maintaining the long-term stability of Thai Baht.
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