Dynamic Effects of Exchange Rates and Foreign Price Inflation : Evidence From Thai

In an attempt to maintain a stable exchange rate and price level in Thailand given shocks from the United States, China, Euro Area, and Japan; the top five trading partners of Thailand, this study employs the system equations of VAR model techniques. Results show that the interest rates, demand shocks, and foreign prices affect the stability of the Thailand exchange rates and price levels. More so, empirical evidences validate the existence of unidirectional causality between Thailand exchange rate and domestic (as well as foreign) price inflation