Consider the Thai Baht and the Peruvian New Sol.
a. If Thai inflation rates decreased, all else equal, explain what that would do to the value of the Baht (relative to the Sol).
b. If Thailand didnt want that change in the value of the Baht to happen, what sort of indirect intervention could they take in the marketplace and how would it work?
c. What are the downsides to that indirect intervention?
d. What direct intervention could Thailand take in the foreign exchange market to prevent the change in the Bahts value? How would it work?
e. What are the downsides to the direct intervention and how might Thailand directly intervene, but do so in a way that avoids the downsides.