||The currency of Thailand is the Baht (B). The exchange control was administrated by the Bank of Thailand (BOT) on behalf of the Ministry of Finance. According to the World Currency Yearbook, Thailand adopted a floating exchange rate regime before 1963. However, this regime was ended on 20 October 1963 and was linked to U.S. dollar at a rate B20.80 per U.S. dollar. In order to retain the pegged exchange rate, the gold content of Thai Baht had reduced for several times. To avoid the continuous reduction of gold reserves, the BOT introduced a 4.5% fluctuation range in May 1972 and up-valued the official rate to B20.00 per U.S. dollar in July 1973.
In March 1978, the exchange rate regime was changed from one that was pegged to the U.S. Dollar to a system of pegging to a weighted basket currency of Thailand's major trading partners. The Effective Rate was established and the Baht's link to U.S. Dollar was broken. Afterwards, the Effective Rate was placed a controlled and was allowed to float within a limited range (Controlled Floating Rate). Between the years 1984 and 1990, the basket of currencies was revised for twice and composed of 10 currencies of Thailand's major trading partners. During the period of 1984-1997, the Exchange Equalization Fund (EEF) defended the Baht value against the U.S. Dollar by using some monetary and financial measures in line with the pegged exchange rate regime.
Since 2 July 1997, Thailand has adopted the managed-float exchange rate regime, of which the value of the Baht is determined by market forces. The Bank of Thailand would intervene in the market only when necessary, in order to prevent excessive volatilities and achieve economic policy targets. The floating regime enhances flexibility and efficiency in monetary policy implementation and increases confidence of domestic and international investors.
Major sources of reference include:
1) World Currency Yearbook (WCY)
2) IMF Annual Report on Exchange Arrangement and Exchange Restriction (IMF)
3) Ariff, Mohamed. 1991. The Pacific Economy: Growth and External Stability. North Sydney: Allen & Unwin Pty Ltd. (Ariff)
to the exchange rate regime
Thai Baht per U.S. Dollar
|20 October 1963||The original floating exchange rate regime was abolished. Thailand adopted a fixed exchange rate regime which was linked to U.S. dollar at a peg rate, B20.08 per U.S. Dollar. (WYC 1984, p.740) || |
|December 1971||The devaluation of U.S. dollar led to Baht's devaluation. The gold content was reduced by 7.89%. (WYC 1984, p.740) || |
|May 1972||To avoid continuously decreased in the gold reserves in Thailand, the BOT introduced a 4.5% fluctuation range which allowed exchange rate floated within a limited range. (WYC 1984, p.740) || |
|14 February 1973||Along with the devaluation of U.S. dollar in February, Thailand cut the gold content of the Baht by 10% for maintaining the pegged exchange rate at B20.80 per U.S. dollar. (WYC 1984, p.740) || |
|15 July 1973||The adoption of 4.5% fluctuation range was taken into effect, the Baht was increased 4% in terms of gold and up-valuing the Official Rate to B20.00 per U.S. Dollar. (WYC 1984, p.740) ||20.000 |
|8 March 1978||The Baht's link to U.S. dollar was broken, and an Effective Rate was established.|
The external value of Baht was determined on the basis of a weighted basket of currencies of Thailand's major trading partners including the U.S. dollar, West German mark, Swiss franc and Japanese yen. (IMF 1979, p.397)
|7 August 1978||The Baht was upgraded to B20.175/20.225 per U.S. dollar. (WYC 1984, p.741) ||20.175-20.225 |
|30 October 1978||The Effective Rate was placed on a controlled, in a floating basis -- Controlled Floating Rate. (WYC 1984, p.741) || |
|29 December 1978|| ||20.390 |
|November 1979||In 1979, there was a war in Southeast Asia. Vietnam invaded Kampuchea (former name of Cambodia) and China retaliated Vietnam. Some nervous money took flight from Thailand. In attempt to ease this liquidity crunch, the interest rate of Nonresident Foreign Currency Accounts was permitted to float and the rates on Baht accounts were also boosted.|
A number of currency controls were relaxed in November. (WYC 1984, p.742)
|31 December 1979|| ||20.425 |
|31 December 1980|| ||20.630 |
|12 May 1981||The soaring U.S. dollar increased the costs of imports while depressing the receipts of exports. Therefore, Thailand downgraded the Baht by 1.08% to B21.00 per U.S. dollar. (WYC 1985, p.819) ||21.000 |
|15 July 1981||Thai Baht devalued by 8.7% to B23.00 per U.S. dollar. (WYC 1985, p.819) ||23.000 |
|31 December 1981|| ||23.000 |
|31 December 1982|| ||23.000 |
|31 December 1983|| ||23.000 |
|5 November 1984||Thai Baht had a biggest change in the currency's history. The Baht changed from B23.00 to B27.15 per U.S. dollar, representing devaluation by 14.8%.|
The Exchange Equalization Fund announced that the basket of currencies was revised to include the U.S. dollar, Japanese yen, West German mark, UK pound sterling, Malaysian ringgit, Hong Kong dollar and Singapore dollar. (WYC 1985, p.817)
|31 December 1984|| ||27.150 |
|30 December 1985|| ||26.650 |
|31 December 1986|| ||26.130 |
|3 December 1987||Following a series of intervention by the Central Bank, the Baht was depreciated 2% from B26.19 to B26.69 per U.S. dollar in attempt to assist exports and stop capital outflow. A "managed float" was being used to control the currency. (WYC 1985/86, p.535) ||26.690 |
|30 December 1987|| ||25.070 |
|1988||Chatichai Choonhaven was chosen as Prime minister. During the year, many import and export restrictions were eased and some exchange controls liberalized. (WYC 1990/93, p.536) || |
|30 December 1988|| ||25.240 |
|31 March 1989||Following the IMF classification, Thailand was considered to be pegged to composite basket of currency. (Ariff, p.155) || |
|29 December 1989|| ||25.690 |
|1990||The Exchange Equalization Fund announced that the basket of currencies was increased from 7 currencies into 10 currencies. The 3 more additional currencies include Brunei Dollars, Indonesian Rupiah and Philippine Pesos. (IMF 1990 p.480) || |
|4 May 1990||Thailand accepted the obligations of convertibility under Article VIII, Section 2, 3 and 4 of the Fund Agreement with IMF. Most restrictions on foreign exchange transactions involving trade in goods and services had been abolished and controls on profit and dividend remittances had been removed. (WYC 1990/93, p.537) || |
|28 December 1990|| ||25.265 |
|1991||Apart from authorized banks, authorized companies and authorized persons were also allowed to deal in foreign exchange operations started from 1991. (IMF 1992, p.480)
|30 December 1991|| ||25.255 |
|30 December 1992|| ||25.520 |
|30 December 1993|| ||25.540 |
|30 December 1994|| ||25.090 |
|7 March 1995||The BOT required banks to submit detailed information on risk control measures on trading in foreign exchange and derivatives in order to improve the supervision on banking system. (IMF 1996, p.475) || |
|29 December 1995|| ||25.190 |
|2 July 1997||The exchange rate of the Baht was determined on the basis of supply and demand in the foreign exchange market and was allowed to float freely (Independently floating).|
The authorities introduced a two-tier currency market that created to separate exchange rates for investors who bought Baht in domestic and overseas markets. (IMF 1999, p.866)
|30 January 1998||The two-tier foreign exchange market, in effect since July 1997, was unified.|
In order to prevent the currency crisis or bankruptcy of commercial banks, the commercial banks are required to maintain at least 6% of their nonresidents foreign exchange deposits in the form of 1) at least 2% as nonrenumerated balance at the BOT; 2) at most 2.5% vault cash; and 3) the rest in eligible securities. (IMF 1999 p.866)
The middle effective rates recorded in IMF annual report are slightly different from those recorded in World Currency Yearbook (WCY).
On 1990-12-28, the effective rate recorded in WCY was B25.29 per U.S. Dollar.
On 1991-12-30, the effective rate recorded in WCY was B25.28 per U.S. Dollar.
From the year 1992 onwards, the rates are only extracted from IMF annual report because the most updated rate recorded in World Currency Yearbook 1990/93 was the rate in 1991.
Started from 1996, the display information of IMF annual report was changed and no exchange rates were mentioned. Therefore, the most updated rates were in 1995.