PEGGING, SPECULATORS, AND THE ASIAN CURRENCY CRISIS OF 1997

Abstract

Stability of an exchange rate can be achieved through a variety of currency policy regimes. While a currency peg can be beneficial to many developing economies, a poorly managed peg can have negative effects on the exchange rate. During late 1997, a currency crisis began to spread through several Asian countries and has become one of the most effective examples of the perils of poorly managed exchange rate regimes. This crisis will be examined in depth to provide and insight into its causes, the way it was handled by each nation involved, and its effects. This will provide a better understanding of the importance of understanding and effectively managing a pegged exchange rate.