economic news article

Economic Analysis

The Government additionally agreed to phase out vitality subsidies by gradually increasing the price of fuel and electricity, but limiting worth increases for kerosene used for home cooking. The first to show signs of disaster was Thailand where the growing present account deficit put pressure on Thai authorities to defend the baht by tremendously increasing rates of interest. This transfer, nevertheless, only exacerbated issues by inflicting the collapse of many closely indebted companies, significantly within the inflated property market. This in turn worsened the issues of the financial sector which was saddled with rising numbers of non-performing home loans and big foreign money owed of short-term or ‘sizzling money’. With international foreign money speculators expecting the Thai Government to devalue, there was a selling attack on the baht in February 1997. The authorities responded by selling billions of dollars in foreign trade reserves to assist the baht, a transfer which was initially successful but quickly faltered within the face of an increased attack on the forex during the yr. In July 1997 the Thai Government was forced to desert the pegged foreign money and by September 1997 the baht had collapsed to 38 to the US greenback, down from the …

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