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Look at this information:Shortly after Blades began exporting toand importing from Thailand, Asia experienced weak economicconditions. Consequently, foreign investors in Thailand feared thebaht’s potential weakness and withdrew their investments, resultingin an excess supply of Thai baht for sale. Because of the resultingdownward pressure on the baht’s value, the Thai governmentattempted to stabilize the baht’s exchange rate. To maintain thebaht’s value, the Thai government intervened in the foreignexchange market. Specifically, it swapped its baht reserves fordollar reserves at other central banks and then used its dollarreserves to purchase the baht in the foreign exchange market.1. How would these transactions affect the value of the baht(appreciate or depreciate), and why? Will inflation or deflationoccur?
