Indonesia- 1997-1998 Question Answers

Added on - Oct 2019

Trusted by 2+ million users,
1000+ happy students everyday
Showing pages 1 to 2 of 4 pages
ASSIGNMENT[Document subtitle]
1Indonesia- 1997-1998ANSWER 1:Before the crisis, the system of the exchange rate was described as the freeforeign exchange system. But there were some restrictions on the currency’s free movement likeforward sales to non-residents for foreign exchange to minimise the volatility of the exchangerate. During the time of crisis, the rupiah was devalued by 50 percent against the US dollar, andit further replaced it as the external anchor along with the basket of currencies which are notdisclosed. After the crisis, the rupiah was devalued by 40 % then 31 % and the nominaldepreciation was targeted against the US dollar ranges from 3 to 5 %.ANSWER 2:The short-run interest was not a predicator of approaching crisis as the countrywas not suffering from the great withdrawals of credit. The stock which was available was notlow as compared to the burden of services of external debt("IMF -- International Monetary FundHome Page", 2016). Further, there was no shortfall of liquidity, and it can be clearly said that therate of short-run interest was not a predicator in order to approach the crisis.ANSWER 3:During the time of crisis there was a build-up of short-term debt, and there was asudden stop at US$34.7 billion and the reserves of foreign exchange at US$19.9 billion. Furtheras a result there was a weakness in the corporate industry and was unable to achieve access to theliquidity in order to conduct trade internationally and nationally and further contributed to thedecrease in output("IMF -- International Monetary Fund", 2016).ANSWER 4:The GDP of Indonesia was declined by 14.8 percent during the time of crisis.After the crisis, it also declined by 2 percent before returning to the same position as it wasbefore the crisis. Further, with the good of amount of rain and the bushfires, the output wasrecovered and improved in the terns of trade which were being created by the decline in the
Desklib Logo
You are reading a preview
Upload your documents to download or

Become a Desklib member to get access