The Asian Financial Crisis began in Thailand in July 1997 and spread to other Southeast Asian countries. These countries had large foreign debts and fixed exchange rates pegged to the U.S. dollar. When the dollar rose in value, it made their exports more expensive globally and exports declined. This caused their currencies to devalue, stock markets to decline, and import revenues and government budgets to be disrupted. The International Monetary Fund provided $40 billion to stabilize the situation. Asset management companies were also established to dispose of nonperforming loans from banks, helping the banks regain strength and resolving long-term debt issues in the financial systems.
The Asian Financial Crisis began in Thailand in July 1997 and spread to other Southeast Asian countries. These countries had large foreign debts and fixed exchange rates pegged to the U.S. dollar. When the dollar rose in value, it made their exports more expensive globally and exports declined. This caused their currencies to devalue, stock markets to decline, and import revenues and government budgets to be disrupted. The International Monetary Fund provided $40 billion to stabilize the situation. Asset management companies were also established to dispose of nonperforming loans from banks, helping the banks regain strength and resolving long-term debt issues in the financial systems.
The Asian Financial Crisis began in Thailand in July 1997 and spread to other Southeast Asian countries. These countries had large foreign debts and fixed exchange rates pegged to the U.S. dollar. When the dollar rose in value, it made their exports more expensive globally and exports declined. This caused their currencies to devalue, stock markets to decline, and import revenues and government budgets to be disrupted. The International Monetary Fund provided $40 billion to stabilize the situation. Asset management companies were also established to dispose of nonperforming loans from banks, helping the banks regain strength and resolving long-term debt issues in the financial systems.
The Asian Financial Crisis began in Thailand in July 1997 and spread to other Southeast Asian countries. These countries had large foreign debts and fixed exchange rates pegged to the U.S. dollar. When the dollar rose in value, it made their exports more expensive globally and exports declined. This caused their currencies to devalue, stock markets to decline, and import revenues and government budgets to be disrupted. The International Monetary Fund provided $40 billion to stabilize the situation. Asset management companies were also established to dispose of nonperforming loans from banks, helping the banks regain strength and resolving long-term debt issues in the financial systems.
Asian Financial crisis which is also known as Asian Contagion was started from July 1997. The crisis which started from Thailand moved towards Indonesia, South Korea and other South East Asian countries. Their currency devalued which caused stock market to decline, import revenues to reduce and disruption in the government. The main causes of Asian crisis were the large amount of foreign debt and the fixed exchange rate system. While Asian market was booming, it became an opportunistic market for the investors who inject large amount of low interest rate foreign fund in the Asia. During this booming period, Thailand, Indonesia and South Korea were the strongest countries in Asia. So, these were the countries that attracted huge foreign funds. However, these funds were not allocated efficiently due weak banking system, corporate governance and lack of financial transparency. The currencies of these three countries were pegged with U.S. dollar which gave false sense of security, encouraging them to take on dollar-denominated debt. However, the rise in the value of U.S. dollar causes the exports of these countries expensive in the global market which caused export to decline. International Monetary Fund funded $40 billion to stabilize the situation. Along with IMF, there has been the role of Asset Management companies to better the Asian crisis. Asset Management Companies were immediately established to dispose, collect and restructure nonperforming loans. AMCs helped banks to regain the strength to provide funds in the economy as their nonperforming loans were transferred to AMCs. So, this resolved the long extended debt present in the financial system. With the transfer of nonperforming loans, banks profitability was increasing slowly.