According to economists, there are five vital reasons for the East Asian currency urgency or Imf of July 1997 that caused a period of economic unrest and turmoil in Southeast Asian financial markets. The countries that were in general affected during the urgency included Thailand, Indonesia, Malaysia, and South Korea. Inadequate foreign change reserves, improper handling of fund allocations and inadequately developed financial sectors in the developing Asian countries have been held as the prime reasons for the drop in the local currency change rates against the Us dollar during the period.
The whole episode of economy urgency started due to inappropriate speculations. Speculators forecasted a decline in international market growth and started selling South East Asian currencies. With this, there was a currency depreciation and sudden drop in the value of Thai baht, Malaysian ringgit, Phillipine Peso and Indonesian rupiah. Due to this, all these markets had to sell their dollars to buy back their currencies. This caused a rapid decline in the foreign change reserves. In the second stage of the crisis, the lower value of the neighboring currencies affected other Southeast Asian currencies like Taiwan dollar, South Korean Won, Singaporean Dollar and Hong Kong Dollar. Governments raised the interest rates for the purpose of defending the local currency and spirited foreign capital. Due to the rapid decline in the economy, investors started removing their investments from the markets, thereby initiating a fall in the stock prices. Imf with the aid of World Bank and Asian improvement Bank arranged hold packages of around 0 billion in order to saving these markets.
Travel Thailand
Certain economists believe that the distorted macroeconomic policies and the fixed change rate of the currency as a major cause for the economic urgency in 1997.
Thailand transfer Rate Crises In 1990
