International Finance: Currency Crisis, Asian Financial Crisis and Aftermath

Running head: INTERNATIONAL FINANCE
International Finance
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INTERNATIONAL FINANCE
1
Table of Contents
1. Discuss and present a timeline outlining the important issues surrounding the currency
crisis:..........................................................................................................................................2
2. Indicating the events leading up to the Asian Financial Crisis (policies, events etc.) that
made the currency susceptible to an attack:...............................................................................3
3. Indicating the defining moments that precipitated the attack:...............................................5
4. What happened in the aftermath (how was the crisis resolved):............................................6
Conclusion:................................................................................................................................7
References:.................................................................................................................................8

INTERNATIONAL FINANCE
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1. Discuss and present a timeline outlining the important issues surrounding the
currency crisis:
The currency crises occur in a situation, where problems occur for the country’s
central banks to have sufficient foreign exchange reserves to maintain the fixed exchange rate
conditions. In addition, the currency crises occur in both fixed and floating rate regime,
which happens due to the low reserves conducted by the central banks of the country.
Moreover, the currency crises increase the debt denomination of a country, where the value
of home currency declines substantially in comparison to other currencies. The currency
crises relatively indicate a fixed response, where speculative attack on foreign exchange
value directly leads to the depreciation of home currency. Furthermore, the measure also
initiates a situation, where the economy comes under pressure, where the prevailing exchange
rate peg or regime (Krueger 2014).
In addition, there are two outcomes of the attack, where it occurs successfully or
unsuccessfully. Under the successful attack measures currency of the home country, which
will depreciate in comparison to other countries. On the other hand, the unsuccessful attack
will does not alter the exchange rate and leave them unchanged in compassion to other
countries. Moreover, the currency crises relevantly feather the international monetary system,
where it has been existing since the early 1970s till date. Moreover, there are certain currency
crises occurred over the period of time, where crisis occurred in different time lines.
The Bretton Woods system in 1971 – 73 adopted a new prosperity without war, where
a fixed exchange rates are established during World War II. The system allowed the countries
post World War, devasted by the event adopted the measure for controlling the currency
convertible in comparisons to dollar (Almeida et al. 2015).