International Financial Management
Answer-5)
All the money supply in the country is controlled by the Central Bank and it has a number of options to control it. The best of them is Open Market Operations (OMO). It will be used in this particular analysis. Let’s assume that Thailand’s central bank is looking for the ways to prevent the withdrawal of the funds from the country.
It is fully controlled by the government and the country. The country may issue government based T-Bills and securities of different maturities like 1 year, 6-Months, 2 years and others. This would help investors to save their money in these treasuries and Thailand’s central bank will have a significant amount of money they will be able to use up to a certain moment. To prevent further depreciation in the baht’s value, Thailand’s central bank would attempt to increase the level of interest rates in the country. This will result in the increased demand for Thai baht by U.S. investors as Thai securities will become more attractive and promising to them. This would also increase currency’s value. On the other hand, this may result in the local borrowing and spending being reduced. This particular action is termed as OMO Mop-UP, and it is an important strategy for the countries suffering from the economic problem and downturn.
This particular answer required to construct a spreadsheet on the basis of provided information. It is required to illustrate the Blade’s treasure which they need to follow in order to speculate on expected movements in the bath’s value over the next 30 years.
