Forecast of the baht-dollar exchange rates will help Blade to predict the future economic status of Thailand. He will be able to determine the inflation and economic growth in the country thus determine the cost of producing in it. The company will, therefore, be able to identify if it is better to continue importing or establish a subsidiary. Blade company will also be able to predict the future demand of the product thus determine if it is worth investing more.
Market-based exchange forecast is easiest to use because Blade is already in business and can quickly view and understand market sentiments, indicator, currency flow and other factors. The technique uses forward rate to develop a forecast. One can get forward rate by getting the differential between prevailing spot rate and interest rate.
Delegate your assignment to our experts and they will do the rest.
The spot rate will yield better market-based forecast because it directly studies the behavior of customers, i.e., how much they will be willing to spend and the behavior of the sellers, i.e., how much they will be willing to take. It is more accurate than the forward rate which uses assumption of the future interest rate.
The rate is expected to reduce by 10 % since this is the highest probability. The value of baht after ninety days will 0.0189.
Technical forecast uses historical data to come up with pattern predicting the future trend. However, it is not always correct as the trend can be changed by some unpredicted factors in the market like the change in technology and increase in competition.
If the value of baht will be 0.02 after ninety days, the technical forecast will be the most accurate technique since its predicted value is very close to the outcome. However, it may not always be correct. The most reliable method is the combination of the three techniques.
