what is the 1997 Asian financial crisis all about n how did it happen?

Answer 1

I was there! Essentially it is similar to the Savings and Loan scandle in the USA around the same time. Lots of people speculated on realestate, stocks etc. and then they all came crashing when banks called on loans and no one had the money.

So in Thailand the thai baht lost 30%-40% +/- its value. In Indonesia even bigger drop, Malaysia and Philippines similar drops. What that meant was Asian companies would owe US companies maybe $10million but all of a sudden they now owed the equivalent of $14-$15million (due to currency conversions) - this busted many thai banks that covered the loans.

It was a sorry time in Asia. The only good thing was if you were a foreigner - you could buy things for 30% - 40% cheaper than you were used to. Things have stabalized over time since then.

Hope this helps!

Answer 2

In summary it was massive investment in Asian economies followed by a sudden panic that affected many economies in the region, starting with Thailand.

In Thailand the Baht was pegged to the dollar at a ration of 25:1. This peg was challenged by currency speculators like George Soros (who has since denied involvement) and Thailand exhausted its reserves trying to defend the peg. Finally the peg was broken and the currency floated, going to above 50 baht to the dollar.

Many businesses and financial institutions had borrowed heavily in US dollars so the net effect was their debt doubled, driving them into insolvency. There was a snowball effect with investors pulling out quickly and most major markets suffering a big impact.

It took several years for Thailand to pay off the resulting IMF loans. The most visible legacy of the crisis, the many unfinished buildings around Bangkok, started to go away in 2001 as property values rose to a point high enough that construction was once again feasible.

Answer 3

Financial crisis came about due to a few events that happened at the same time. The former President of Indonesia, Suharto, was ousted and send the Indon market into a dive. At that time, Thailand decide to float its baht and the value just drop. Coupled with the Indon market drop, it sent the region into a spiral dive too.

This was what happened.