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Asian Crisis

In: Business and Management

Submitted By baysidefish
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Asian Crisis
• What happened and when did it happen?
Asian Crisis that hit pacific Asian in middle 1997, it liked a big earthquake suddenly hit Southern Asia. In Thailand, the July 2, 1997 when it currency had to devalue, the baht, about 20% against the US dollar, as a result of intense pressure in the foreign exchange market. Not only currency speculators but also many Thai residents were trying to sell the baht and buy the US dollar, causing and worsening capital flight out of the country, as the Thai government was running out of its foreign reserves and losing market confidence in maintaining the currency value and financial stability. The interest rates were shot up, as the outflow of short-term capital intensified. Then, the previously inflated stock and real estate markets collapsed and that has led to Thailand's worst recession in the postwar period with sharply rising unemployment and business failures, and the exports cheaper, pressuring other currencies to follow suit.
Once the crisis hit Thailand, it has quickly spread to Indonesia. it's rupiah came under vicious attack and had to be devalued by about 90% over the period of just a few months. Interest rates were rising sharply, as capital flight from Indonesia was accelerating a complete collapse in the financial as well as the political system in that country.
The Asian Crisis also has brought down South Korea, just like Indonesia and Thailand, has gone almost bankrupt as a nation and is receiving financial assistance from the International Monetary Fund and other major countries. As of mid-1998, the assistance package totals about
$55 billion for South Korea, while that for Indonesia is $45 billion and for Thailand $35 billion.
• Why did it happen? Who was involved?
There are several factors causing and worsening the crisis in Asia.
First of all, there are some currency factors. All of

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