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Low Interest Rates Cause Currency Issues in Developing Economies

Written by: Rey Garcia
Photo by: Lisheng Chang at Unsplash

Last update: 28 november 2023

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Interest rates in developing countries, especially in Asia, are lower than those in advanced nations like the United States. This difference in interest rates is causing more ups and downs in the value of currencies and is making it harder to manage the movement of money.

The Thai baht, which is the currency used in Thailand, has become more unstable lately. Its value is swinging between 8% and 9%, compared to the 3% to 4% range before the pandemic. Even though Thailand has a lot of money saved up and is making more money from other countries than it's sending out, it's important to be careful and not get too confident.

The higher interest rates in advanced countries, which they're using to control the cost of living, are making it tough for countries that are still developing to attract investments. This can lead to difficulties in managing their economies. The Governor of the Bank of Thailand, Sethaput Suthiwartnarueput, is also worried about the fact that people in Thailand owe a lot of money.

This is affecting how much money tourists from other countries spend when they visit, and that's a big part of Thailand's economy. Even though there are some good things happening with tourism and selling things to other countries, there are still problems to solve.

Source: Bloomberg


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