ABSTRACT
In June 1997, foreign investors started withdrawing capital from Thailand. The Thai central bank, assisted by the IMF, bought large sums of Thai currency in an attempt to keep the Baht pegged to the US dollar. On July 2nd, the defence of the Baht was given up, however. The fl oating of the Thai Baht marked the beginning of what came to be known as ‘the Asian crisis’. The Baht’s sharp decline and the rising interest rates in the months following made it impossible for a large number of Thai banks and private sector companies to service their foreign debts. Hence, a surge of bankruptcies resulted, with severe consequences for the Thai economy. By October, similar events had occurred in a number of other East Asian countries, including Indonesia and South Korea, two of the world’s largest economies. The resulting increase in unemployment and poverty in Asia made it “one of the worst calamities of the twentieth century” (Wade & Veneroso 1998: 44). Worries developed that the crisis might spread further, possibly causing a general depression in the world economy (ibid.).
