Forecasting Exchange Rates Case Study Example | Topics and Well Written Essays - 500 words

Forecasting Exchange Rates - Case Study Example The forecast, however, depends on probability which might cause uncertainty. Technical forecast will indicate the depreciation of the baht to help the company understand the how their money could be work for them understand these conditions (International Journal of Forecasting 2008). Technical forecast will however depends on fundamental forecast to get historical data of inflation and interest rate. The market-based analysis is based on the market and their implication of inflation and interest rate. The market analysis depends on demand-supply analysis. The market based analysis will help the company understand the consumption of their products in the Thailand market. It also assists management to know what quantity of export is needed. The analysis is also inclusive of interest rates and inflation rate and how it will affect the demand and supply of their products (International Journal of Forecasting 2008). If in the reality the value of the baht  90 days from now  is $0.22. Using technical forecast, baht will depreciates with six percent to give its vale at $ 0.22. Technical forecast shows that the expected results are equal to the real value. The fundamental forecast has three scenarios. The scenarios depend on the chances of depreciation and their percentage. If the chance for depreciation is 30% then baht will deprecates by 2% making the value of baht to be $0.18. 15 % chance of depreciates, baht will depreciates with by 5%, making the value of baht to be $ 0.21. 35 percent change, baht will depreciate with 10% making the value of baht to be $0.20. The market based analysis is involved in interpreting the calculation. In the calculations, it is true to say that fundamental forecast is accurate but tiresome. It offers a wide range of solution with different scenarios. The values from the fundamental are added