The 97 Financial Crisis

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The 1997 financial crisis was a major global event that affected many countries. It began in Thailand, where currency speculation led to the devaluation of the Thai baht. Investors were concerned that this could further affect the country’s financial stability. The Bank of Thailand, attempting to prevent the devaluation, defended the baht for months, depleting its reserves. But on July 2, 1997, the country gave in and let the baht float. In the months that followed, other Asian countries began to devalue their currencies. The Philippines, Malaysia, Indonesia, and South Korea followed suit, and all four countries subsequently let their currencies float. In October, South Korea also floated its rupiah, and the won depreciated more than 55 percent, with the lowest level of the year being reached in late December. The crisis threatened global financial stability.

The crisis also had repercussions in the United States. Southeast Asia was particularly affected, with stock markets and currency values falling. It was a major event that caused global economic turmoil, and resulted in massive riots across the region. Despite its global consequences, the ASEAN+3 economies are now stronger than they were in the late 1990s.

The 97 financial crisis affected many economies, and stock markets and real estate prices plummeted. Bankruptcies spread, production slowed, and unemployment spiked. Outflows of net private capital topped $12 billion in 1998, equal to ten percent of the combined gross domestic product of the countries affected by the crisis. The crisis ended in the year 1999, when markets stabilized.

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