Fixed Exchange Rates versus Floating Exchange Rates: The Ordeal of Baht

The purpose of this research paper is to analyze the system of floating exchange rates as opposed to the system of fixed exchange rates. The current financial crisis in Thailand regarding the devaluation of the Thai currency, namely the baht, will be examined to support the assertion that a system of fixed exchange rates is less desirable because it does not allow for adjustments to changing economic conditions. It is my assertion that the system of floating exchange rates is the most desirable system because it allows for adjustments to changing economic conditions.