The future value of the baht

All the forecasting techniques have its own importance and no one can deny the significance of these forecasting techniques. Technical analysis debates over past trends of currencies specially Baht. This analysis primarily focuses on the past prices and volume and not debates over other variables such as economic, political, etc (Milton, 2009). While the Fundamental analysis is a very important currency forecasting technique which discusses the relationship between different non financial information/variables (such as inflation rates, national income growth, and other macroeconomic variables) and exchange rates (Milton, 2009).

Market Based forecasting technique takes all the market sentiments in consideration and in according to the behavior of market sentiments this technique draw a valid conclusion which in the makes an impression on the future foreign exchange rate of Baht (Wadhwa, 2005). According to my assessment, Technical analysis is slightly hindered the foreign exchange dealers or market because it is very difficult to predict day by day movements remember this model assess the past and in accordance with the analysis this technique respond the future .

This analysis would not be useful the foreign exchange market is weak-form efficient. Moreover, this technique only focuses on the near future and rarely provides point/range estimates. Fundamental analysis debates on quantitative measurements (with the aid of regression models and sensitivity analysis). This technique also talk about Purchasing Power Parity (PPP).

But it is not give the appropriate and valid result because in the case of PPP certain behaviors like impact of inflation, trade barriers, changes in the sensitivity of currency, etc also gives the wrong estimations regarding the future rate of Baht. Market-based forecasting well suited for the currency market and especially for the currency of Baht because in the currency market either the spot rate or the forward rate is used which makes an impression on the future exchange rate and all the market participants behaves according to the future rate.

In short, this technique molds according to the behavior of the foreign exchange market (Wadhwa, 2005). All in all, Market-based forecasting method is quite feasible and easy to assess the behavior of the foreign exchange because this analysis predict the results according to the current behavior in accordance with the spot rate or the forward rate so it is very easy for the speculators and analysts to draw a valid conclusion from the Market-based forecasting method.

Reference Milton, Adam (2009). Fundamental or Technical Analysis?. Retrieved August 3, 2009, from About Web site: http://daytrading. about. com/od/daytradingbasics/a/FundamentalOrTe. htm Wadhwa, S. (2005). FORECASTING Ex-RATES- (MARKET BASED INDICATORS). Retrieved August 3, 2009, from Cool Avenues Web site: http://www. coolavenues. com/forums/showthread. php? t=7131

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