Indonesia

Nanto notes how the Indonesian financial crisis of 1997 begin with two rounds of currency depreciation started occurring in early summer of 1997. The very first round resulted in a dramatic drop in the importance of the Indonesian rupiah. As the rupiah began stabilizing, a second round started out with downward pressures hitting the Taiwan dollar, South Korean won, Brazilian real, Singaporean dollar, and Hong Kong dollar.

Governments countered the weakness in their currencies by selling foreign exchange reserves and raising interest rates. As soon as it became as well pricey to your Indonesian federal government to defend the country's currency in August 1997, the Indonesian federal government stopped trying to intervene in international foreign exchange markets as well as the rupiah started out depreciating. The exchange rate spiraled downward in late 1997. Numerous foreign investors panicked and began withdrawing their money. At the same time, local organizations with foreign borrowings started out selling rupiah to buy ample foreign currency to cover their principal and interest payments. This panic buying accelerated the decline in the rupiah in foreign exchange markets.

This foreign exchange rate volatility slowed economic growth and created interest-bearing securities a lot more attractive than equities. The currency crises also has revealed severe problems in the banking and financial sectors in Indonesia. The Indonesian financial crisis of 1997 affected the U.S. ec . U.S. companies that compete with imports from Indonesia experienced a downward pressure on prices. | | | |use of a band. |amounting to about | . private-sector debt problems and poor loan quality, . U.S. exporters to Indonesia, just like manufacturers of heavy equipment, aircraft, manufacturing machinery, and agricultural commodities saw demand decline. On a microeconomic level, it affected particular firms and specific industries, each inside a numerous way that depends on their relationship with Indonesia.

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