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Currencies |
| THAI BAHT |
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| Introduction
| Overview | Structure
| History | Factors
affecting change in exchange rates | Daily
trend of Thai baht | Weekly
trend of Thai baht |
| Introduction |
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Baht is the official currency unit of the kingdom of Thailand. It
has been serving as the national currency since 1897 and had been
in existence from even before it was made the national currency.
It is known as Thai baht and is denoted with the symbol "฿".
The word "baht" is taken from the similar named unit of
measure of gold used in Thailand. The subunit of the currency is
"satang" that breaks up the unit of baht into 100 equal
parts. In Thai language, baht is written as "บาท".
According to International Organization for Standardization,
referring to the 4217 standard, currency code alloted to the Thai
baht is THB and the numeric code assigned to the currency is 764.
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Overview
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Thailand baht is counted among one of the strongest currencies in
the Southeast Asia. The value of the currency has stayed far
stronger against the US dollar as compared to other currencies of
the developing world. In the time of Asian financial crisis when
most of the Asian currencies were devalued, its value declined to
the lowest @ 56 baht to 1 dollar. But the currency has recovered
since then quite well though the crises started off from Thailand
only. The current value of the currency against the dollar hovers
between 30-35 baht. The monetary policy of the central bank of
Thailand focuses on a stable price and inflation rate that helps
stimulates economic growth. The economy is characterized by weaker
imports and that is responsible for the imbalance in Thai exports.
There are some interesting facts that the
Thai baht is attached with. First of all is regarding the image of
the king of the country on the banknotes. Because the banknotes
have the image of the king, putting the wallet containing the
banknotes in the back pocket as it might allow someone to sit on
the image or stepping on the banknote is considered disrespectful
in Thailand. In some rural areas in Thailand, small denomination
notes are found displayed in the front of some shops to connote
respect to the king. Also, due to the huge similarity between €2
coin and 10 baht coin may it be shape, size or weight, often
vending machines get confused and take the coins for another’s
value.
Regarding the import and export restrictions,
the exports of the local currency has been limited to the amount
below 50000 baht. The import of the local currency can be done
without any limitations. The foreign currency exports are
restricted up to the amount of the amount of the foreign currency
imported.
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Structure
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Baht is the currency based on decimal system and
breaks up into 100 equal parts having "satang"
as its subunit. The currency unit has been
serving as the national currency of Thailand
since 1897, though it was based on metric system
at that time. The Bank of Thailand assumes the
role of the central bank of the country that is
in existence since 1942 when it took over the
Thai National Banking Bureau. Along with
issuance of the currency, the Bank of Thailand
is also responsible for the printing of the baht
banknotes.
The banknotes are issued in 5 denominations
that are 20, 50, 100, 500 and 1000 bahts and
have different color pattern for each face value
so as to make them look different from each
other. The 20 baht banknote has green color
pattern, 50 baht note is based on blue color
pattern, 100 baht note on red color pattern, 500
baht banknote on purple and the 1000 baht
banknote has a gray as its predominant color.
The sizes of the notes vary and depend upon the
face values of the note i.e. higher the face
value of the note, larger gets the note size.
Also, the scripts on the front and the back of
the notes are in Thai language. Front sides of
all the banknotes show in common, the portrait
image of the king of the Thailand, Bhumibol
Adulyadej. The backsides of the notes possess
images of the kings that preceded Rama IX, the
present king. The list below mentions the detail
regarding the images
- 20 baht note - Portrait of King Ananda
Mahidol (Rama VIII)
- 50
baht note - Monument of King Mongkut (Rama
IV)
- 100
baht note - King Chulalongkorn (Rama V) in
military uniform
- 500
baht note - Royal statue of King Nangklao (Rama
III)
- 1000
baht note - King Bhumibol Adulyadej (Rama
IX) with a drawing of Pa Sak Jolasid dam
The coinage in the currency
is minted by the Royal Thai Mint that issues the
coins in 9 denominations. It includes coins
denominated as 1, 5, 10, 25, 50 satang, 1, 2, 5
and 10 baht, the 3 lowest value coins are in
bank circulation only and not in market
circulation. The rest of the coins are well in
public access and are used in daily
transactions. Like the banknotes, the coins also
use the Thai language for the script that is
engraved on them. All the coins bear
the embossed portrait of King Bhumibol Adulyadej
on their obverse sides. The current coin series
is based on "temple" theme and all the
coins depict the pictures of temples in Thailand
on their reverse sides, the details for which
are mentioned below
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| History |
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The concept of money in Thailand is as old as 1000
years, developed even before Christ when barter trade
prevailed followed by the money in beads and stones
form. Seeds, bracelets and pebbles were also a part of
the currency system at that time. In Indochina, during
the reign of Funan Empire in 1st - 7th century, coins
were introduced that were minted from metals or
metallic alloys, got popular and got spread in various
countries other than Indochina. Thailand was one of
them, and the coins became a part of currency system
in there. The Dvaravati coins took over the place of
these coins later in time span of 7th to 11th century.
With time, many other types of innovative coins
circulated in Thailand, important among them were
sandalwood flower coins in 8th - 13th century, cowrie
shells and baked clay coins in the pre-Sukothai era,
bullet coins in the Sukothai era and lanna coins and
silver and copper boat shaped coins from 14th to 19th
century.
Not until in the time of King
Rama IV was there a basic structure to the currency
system. He made remarkable efforts to formalize the
system by standardizing the factory-minted coins and
officially issued paper currency. It was this time
only when the foreign trade in the southeast
flourished and the concept of formalizing the currency
gained utmost importance. The country was presented
with the first minting machine by Queen Victoria of
Britain in 1857 and the Royal mint of Thailand was
established. The currency issued was denominated in 5
units that are satang, tho, phi, padueng and baht.
King Chulalongkorn, the successor to King Rama IV,
centralized the currency into 2 units only that were
most popular between the 5 i.e. sating and baht. Baht
was made the official currency unit of the country and
it was initially divisible into 8 fuang that could be
further broken down into 8 atts. The value of the
currency was completely based on the value of silver.
In 1902, the currency was decimalized and satang was
adopted as the subunit, 100 satang making 1 unit of
baht.
In 1928, baht dropped its silver
peg to adopt the gold standards. This gold peg of the
currency didn’t last for long and the country had to
leave it in 1932. During the Second World War, Japan
occupied Thailand and the currency of Thailand was
made to peg to Japanese yen at par. This made the
currency encounter huge drop in its value as excessive
numbers of banknotes were issued at that time. The
Asian financial crisis in 1997 sparked off from
Thailand only, the country had to devalue its currency
about 20% of the value of baht at that time due to
increasing pressure on the currency and that had a
detrimental effect where it compelled the other Asian
countries to devalue their currencies too.
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| Factors
affecting the exchange rates between two countries
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The volatility in the foreign exchange rates
depends upon a numerous macro economic factors that
have different degrees of importance to different
economies of the world. Some special and exceptional
factors affecting the rates may also exist in the case
of different countries. Following are shown the common
factors on which the foreign exchange rate depends
- Flow of imports and exports between the
countries
- Flow of capital between the countries
- Relative
inflation rates
- Fluctuation limits on exchange rate
imposed by the governments of the countries
- Merchandise trade balance
- Rate of inflation in the country
- Flow of
funds between the countries for the payment of
stock and bond purchases
- Relative growth
- Short term
and long term interest rate differentials
- Cost of borrowings
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