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04-08-2022, 09:49 AM
ByMichelle Jamrisko, Faseeh Mangi, and Anusha Ondaatjie
August 4, 2022 at 4:00 AM GMT+8
Pakistan is scrambling for a bailout to avert a debt default as its currency plummets. Bangladesh has sought a preemptive loan from the International Monetary Fund. Sri Lanka has defaulted on its sovereign debt and its government has collapsed. Even India has seen the rupee plunge to all-time lows as its trade deficit balloons.
Economic and political turbulence is rattling South Asia this summer, drawing chilling comparisons to the turmoil that engulfed neighbors to the east a quarter century ago in what became known as the Asian Financial Crisis.
Back then, what seemed like an isolated event—Thailand’s July 1997 baht devaluation to cope with currency speculation—spread like a virus to Indonesia, Malaysia, and South Korea.
......
A month later hedge fund Long-Term Capital Management, which had made highly leveraged bets on Russian and Asian securities, buckled.
......
The fault lines started to show this spring, when the US Federal Reserve accelerated interest-rate increases to combat inflation. That set dominoes falling in South Asia, where inflation has also been roaring. Easy money dried up, currencies depreciated, and foreign exchange reserves dissipated.
Read full article at: https://www.bloomberg.com/news/articles/...es-of-1997
August 4, 2022 at 4:00 AM GMT+8
Pakistan is scrambling for a bailout to avert a debt default as its currency plummets. Bangladesh has sought a preemptive loan from the International Monetary Fund. Sri Lanka has defaulted on its sovereign debt and its government has collapsed. Even India has seen the rupee plunge to all-time lows as its trade deficit balloons.
Economic and political turbulence is rattling South Asia this summer, drawing chilling comparisons to the turmoil that engulfed neighbors to the east a quarter century ago in what became known as the Asian Financial Crisis.
Back then, what seemed like an isolated event—Thailand’s July 1997 baht devaluation to cope with currency speculation—spread like a virus to Indonesia, Malaysia, and South Korea.
......
A month later hedge fund Long-Term Capital Management, which had made highly leveraged bets on Russian and Asian securities, buckled.
......
The fault lines started to show this spring, when the US Federal Reserve accelerated interest-rate increases to combat inflation. That set dominoes falling in South Asia, where inflation has also been roaring. Easy money dried up, currencies depreciated, and foreign exchange reserves dissipated.
Read full article at: https://www.bloomberg.com/news/articles/...es-of-1997
