Relativity of Economic Fundamentals and Fluctuation of Thai Currency: Spectra Analysis of Thai Baht REER (Real Effective Exchange Rate)

Abstract

This paper examines the major wave functions that influence the real effective exchange rate of Thai baht. In this paper, Fourier transform technique is used to extract the hidden sinusoidal wave function in the main graph. Consequently, the wave function will lead to development of a better mathematical model which can be used to predict the future value of exchange rate. An exchange rate prediction is one of the most important tools to develop better strategic decisions. In accordance with the results gained, we can
show the relativity of economic fundamentals and currency fluctuation, which implies that the basis unit of economic fundamentals exists and its characteristic of time-value (price
quantity) function is shown in sinusoidal waveform.