If a firm in Thailand borrows dollars from a United States bank, its interest payments on the loan in Thai baht will decrease if the baht appreciates against the dollar.

Question

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If the Thai baht appreciates against the dollar, it means that each baht can buy more dollars than before. Therefore, when the firm converts its baht to dollars to make interest payments, it will need fewer baht to meet the dollar amount of the interest payment, effectively decreasing the cost of the interest payment in terms of Thai baht.

If a Firm in Thailand Borrows Dollars from a United