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Currencies
THAI BAHT
Introduction | Overview | Structure | History | Factors affecting change in exchange rates | Daily trend of Thai baht | Weekly trend of Thai baht
Introduction


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.

Overview


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 Ä2 coin and 10 baht coin may it be shape, size or weight, often vending machines get confused and take the coins for anotherís 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.

Structure

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

  • 1 satang coin - Haripunchai temple in Lamphun

  • 5 satang coin - Phra Patom temple in Nakhon Pathom
  • 10 satang coin - Phrathat Chungchum temple in Sakon Nakhon
  • 25 satang coin - Mahathat temple in Nakhon Si Thammarat
  • 50 satang coin - Doi Suthep temple in Chiang Mai
  • 1 baht coin - Phra Kaew temple in Bangkok
  • 2 baht coin - Saket temple in Bangkok
  • 5 baht coin - Benchamabophit temple in Bangkok
  • 10 baht coin - Arun temple in Bangkok
History


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 didnít 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.

Factors affecting the exchange rates between two countries


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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