The Effect of Real Exchange Rate on Thailand’s Export

The effect of real exchange rate on trade flow enables effective planning and management of exchange rate risk. This paper seeks to examine the impact of real exchange rate volatility, Real Gross Domestic Product (RGDP) and Bilateral Real Exchange Rates (BRER) on Thailand’s exports to its two major trading partners, Japan and the US. It is revealed that there are significant evidences that the RGDP of Japan and the US have a positive impact on Thailand’s real exports. The Thailand-Japan bilateral exchange rate is also found to be negatively linked to Thailand’s real export. Consequently, Thailand should consider reducing its exchange rate misalignments and diversify its export portfolio away from the US.