The Asian Financial Crisis is also called Asian Contagion. This was a series of currency devaluations and other events that spread through many Asian markets at the beginning of the summer of 1997. The currency market in Thailand was the first to fail as a result of the government’s decision to move away the local currency from the U.S. dollar. Currency declines immediately spread through all South Asia, which in its turn let to stock market declines, reduced import revenues and even government upheaval.
The Financial Crisis in Aisa partly came by financial intervention from the International Monetary Fund and the World Bank. Anyway, some market declines were also felt in the United States, Europe and Russia as the Asian economies collapsed.
As a consequence from the crisis, many nations adopted some measures to ensure the stability of their own currency. Most of the times this led to heavy buying of U.S. Treasuries, which are used as a global investment by most of the world’s sovereignties.
The Asian crisis forced some necessary financial and government reforms in countries like Thailand, South Korea, Japan and Indonesia. It also serves as a valuable case study for economists who try to understand the interwoven current markets, especially as it relates to currency trading and national accounts management.