ABSTRACT
In July 1997 the currency and financial crises erupted unexpectedly in Thailand and gradually spread to most of the Association of Southeast Asian Nations (ASEAN) economies.1 Figure 6.1 documents the behaviour of the exchange rate (Asian currency in terms of the US dollar) in Indonesia, South Korea, Malaysia, the Philippines and Thailand from January 1997 to December 1999. In July 1997 the Thai baht came under attack. Within a few months, Indonesia, South Korea, Malaysia and the Philippines succumbed to the currency crisis. Figure 6.1 shows that in July 1998 the Thai baht, the Korean won, the Malaysian ringgit and the Philippine peso were reduced to 60 per cent of their January 1997 levels, and the Indonesian rupiah declined to 15 per cent.
