Thailand stands out as an
economy whose real exchange rate was low and stable continuously from 1950s to the middle
of the 1990s. This can be made possible, mainly because Thailand chose to use outwardoriented
strategy, although few capital intensive industries were heavily protected under a
high wall of tariffs. Other explanation lies in the fact that Thailand has been producing food
enough to feed their own people and exporting to the world market. Rice is the main stable
good which the price of rice has always been insulated from the world market price by using
various policies since World War II. This wage good has been kept low and stable over the
last fifty years and these result in the strongest price stability in Thailand (Christensen et.al.,
1993; Siamwalla et al 1989).