THE RELATIONSHIP BETWEEN OIL PRICES AND THE REAL EFFECTIVE EXCHANGE RATE IN THAILAND.

This research article aims at examining the nature of the relationship between the real effective exchange rate and oil prices in Thailand for the period 1997 to 2019. It is expected that bilateral exchange rates have more fluctuation under a floating exchange rate than under a fixed exchange rate. The monthly data of real oil prices and real effective exchange rate have been employed for the analysis. The results indicate that these two series do not have co-integration and causality connections. However, a raise in the instability in oil prices brings to a raise in rate of exchange instability. These findings have important policy implications for the government. [ABSTRACT FROM AUTHOR]