East Asian Finanacial Crisis

The East Asian financial crisis was a period of economic unrest that started in July 1997 in Thailand and affected currencies, stock markets, and other asset prices in several Asian countries, many considered East Asian Tigers. Indonesia, South Korea and Thailand were the countries most affected by the crisis. Western investors lost confidence in securities in East Asia and began to pull money out, creating a domino effect.
At the time Thailand, Indonesia and South Korea had large private current account deficits and the maintenance of pegged exchange rates encouraged external borrowing and led to excessive exposure to foreign exchange risk in both the financial and corporate sectors.
In the mid-1990s, two factors began to change their economic environment. As the U.S. economy recovered from a recession in the early 1990s, the U.S. Federal Reserve Bank under Alan Greenspan began to raise U.S. interest rates to head off inflation. This made the U.S. a more attractive investment destination relative to Southeast Asia, which had attracted hot money flows through high short-term interest rates, and raised the value of the U.S. dollar, to which many Southeast Asian nations' currencies were pegged, thus making their exports less competitive. Finance One, the largest Thai finance company collapsed. On 11 August, the IMF unveiled a rescue package for Thailand with more than 16 billion dollars. The IMF approved on 20 August, another bailout package of 3.9 billion dollars.
Before the financial crisis, the Thai economy had years of manufacturing-led economic growth--averaging 9.4% for the decade up to 1996. Relatively abundant and inexpensive labour and natural resources, fiscal conservatism, open foreign investment policies, and encouragement of the private sector underlay the economic success in the years up to 1997.
Trade: Thailand's traditional major markets have been North America, Japan, and Europe, Thailand has joined the ranks of the world's top ten automobile exporting nations. Machinery and parts, vehicles, electronic integrated circuits, chemicals, crude oil and fuels, and iron and steel are among Thailand's principal imports.
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