Question

The Asian currency crisis a. Was caused because these countries had pegged their currencies to the...

The Asian currency crisis

a. Was caused because these countries had pegged their currencies to the yen

b. Was caused in part by exchange rates pegged to the US dollar while interest rates in Asian countries were much higher than US interest rates

c. Was caused because these countries had built up huge official reserves of US dollars

d. Was most severe in Hong Kong

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Answer #1

The Asian Currency Crisis happened during 1997 and impacted South East Asia and East Asia countries. The reason is due to Exchange rates pegged to the US dollar while interest rates in Asian countries were much higher than US interest rates. Since the interest rates were higher these countries have received significant inflow of money and impacted their asset prices. Key countries impacted are Thailand, Indonesia, Southkorea, Philippines, Vietnam etc.

Answer: (b) Was caused in part by exchange rates pegged to the US dollar while interest rates in Asian countries were much higher than US interest rates

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