Optimization of export portfolio using multiple currency concept: an application to Thai rice export

Abstract

Rice is an important economic crop of Thailand and is widely exported abroad. However, exports are subject to the risk of exchange rate fluctuations. Therefore, this research aims to propose a method to export rice by exporting rice with multiple currencies instead of using one currency. By calculating the proportion of Thai rice exports with foreign currency different currencies. And compare the risks with the case of exporting with a single currency to get the most suitable export portfolio for maximum return and minimum risk. Multiple currency export ports are guided by different currencies used for export. The concepts presented here apply to rice exports from Thailand in four major currencies: US Dollar, Euro, Yen and Yuan. The calculations are based on Markowitz's portfolio theory. By calculating the exchange rate and export prices of rice, the result is a return and a risk that can be taken to calculate the appropriate proportion of currency. The study found that multiple currency portfolios can offer lower risk than single currency portfolios and yield similar returns to higher-risk single currency portfolios. Therefore, a multi-currency portfolio can be an optimal portfolio. This study is therefore useful for exporters to determine the proportion of multi-currency income exported from trading partner countries in order to achieve the highest return and the lowest risk.