THE IMPACT OF U.S. MONETARY POLICY ON FOREIGN TRADING VOLUME: THE CASE OF THE STOCK EXCHANGE OF THAILAND

Abstract

The impact of U.S. Monetary Policy on the international financial markets has been one of the most debated topics among academics and policy makers. This present study examines the effect of the Federal Reserve’s action monetary policy on the foreign trading volume of the Stock Exchange of Thailand for the period between 1995 and 2017. An empirical analysis of multiple linear regression suggests that both unanticipated and anticipated changes in U.S. federal funds rate do not affect trading volume of the foreign investors on the Stock Exchange of Thailand. However, the Thai baht-U.S. dollar exchange rate which is one of the control variables in this study has significant relationship with foreign trading volume of the Stock Exchange of Thailand. The findings offer guideline for capital control and risk management required to promote sustainable economic growth and prosperity