Firms in Thailand that had borrowed dollars while the baht was pegged to the dollar faced interest payments that were ________ than they had planned while the Thai government continued trying to defend the peg,because the baht had been pegged ________ the equilibrium exchange rate for the baht.

Question

Quizplus · Accepted Answer

The baht had been pegged above the equilibrium exchange rate for the baht, so when the baht was allowed to float, it depreciated, making dollar-denominated debt more expensive to service.

Firms in Thailand That Had Borrowed Dollars While the Baht