Description: From 1990 to 1997, Asian countries achieved higher economic growth than any other countries across the globe. They were viewed as models for advances in technology and economic prosperity. In the summer and fall of 1997, however, they experienced financial problems that led to the Asian crisis and resulted in the bailouts of several countries by the International Monetary Fund (IMF). Much of the crisis is attributed to the substantial depreciation of Asian currencies, which caused severe financial problems for firms and governments throughout Asia as well as other regions. This crisis demonstrated how exchange rate movements could alter country-specific conditions, thereby affecting the firms that operate in these countries. The crisis worsened due to rampant speculation.

Guiding questions:

1. What were the main causes of the Asian crisis of 1997?

2. Discuss the effects on one of the following Asian countries: Malaysia, Japan, Thailand, Indonesia

3. Do speculators cause such a crisis, or do they simply respond to market signals of weakness?

4. How can a government manage foreign exchange speculation?

5. What lessons were learned and what steps were eventually taken to normalize the countrys (same country you chose in question 2) economy?