1997
Asian financial crisis

In July of 1997, Thailand was forced to float its currency the Baht as a result of intense internal pressure from fiscal debt and a surging asset price market. The people of Thailand and foreign currency speculators added more downward pressure on the Thai Baht seeking safety on the US dollar. As a result of this market force, the government devalued the Baht to as much as 20% against the US dollar. The economies around the region were affected as a result of this devaluation. The now much cheaper Thai currency also applied heavy pressure on currencies such as the Indonesian Rupiah which was devalued at 90% of its original buying power and the South Korean Won. The crisis was caused by the effect of inter-connected financial markets where investments of a particular nation like South Korea is exposed in south east Asian markets such as Thailand, Indonesia, Malaysia or the Philippines. The slowing down of the economies of the said countries was caused by an overheated equities market which was followed by price inflation. The International Monetary Fund provided assistance on the region noting that countries need to enforce a high interest rate coupled with higher tax rates and austerity measures.


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