ALMOST 29 years ago, the Asian Financial Crisis (AFC) was triggered following the attack on the Thai baht, resulting in Thailand being forced to abandon its currency peg to the US dollar and float the local currency.
What followed was a massive attack on other regional currencies as most Asian countries were also vulnerable due to foreign currency debt exposure, twin deficits, and even an unsustainable rise in property prices from heated stock markets brought about by hot money inflows. Thailand, Malaysia, Indonesia, the Philippines, and South Korea all experienced unprecedented market volatility, which led to a free-fall in their respective local currencies.
Businesses were hugely impacted, while governments in the region also came under pressure due to a significant rise in borrowing costs and social unrest.
The contagion impact of the regional crisis soon spread to Singapore, Hong Kong, Taiwan, and Japan, and these markets and economies too were impacted severely.
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