Good evening ladies,
Today I am going to talk about the Asian Financial Crisis 1997.
It was a big shock to Asia and the world because people were not aware of it and no one saw it coming and it hit suddenly . Furthermore, when the crisis started people did not know why it happened. There was much confusion and also anger. The scholars presented different theories about this crises.
I am going to present one theory, It came from Bangkok, George Sorros, a foreign investor in Bangkok spread a rumor predicted that the Thi Bath was going to depreciate, and he was a man capable of shaping public opinion. all the foreign business men converted the local currency into US dollars . At the time the Thi bank had a fixed low exchange rate and when huge sums of dollars were taken from the bank, it didnt have enough money to maintain that exchange rate. Therefore they started using the reserve to maintain the same fixed rate and stabilize.
Many of the foreign investors converted their money to USD from the Thai bank and went away closing their businesses in Bangkok which was a hug loss to Bangkok
Finally, the bank did not have enough money and it could not maintain the $US at the same fixed rate. So suddenly the $US rate rose to the roof top and everyone was surprised. Thailand at that time had a debt of USD 100 billion which was like 2.5 trillion bhatt. But due to the change in exchange rate this figure doubled to 5 trillion.