Wednesday, December 3, 1997 Published at 19:50 GMT
Asian tigers: Losing pride
It has been a turbulent period for the Asian economies
The post-colonial Hong Kong Hang Seng index crashed in October, losing more than 10% of its value, following an attack on the HK dollar's peg to the US dollar. It was its biggest-ever one-day fall. By mid-October, Hong Kong shares lost nearly half their value from the time of the handover to China in July.
Prime Minister Dr Mohamad Mahathir has been the most vocal opponent of currency speculators, even calling for the practice to be outlawed. He told a World Bank seminar it was "unnecessary, unproductive and totally immoral". His most passionate attacks were on arch currency speculator George Soros, and said there may be a Jewish agenda at work against his country. Hungarian-born Mr Soros is Jewish. The ringgit has fallen by nearly a third against the US dollar since early July, and the Malaysian stock market by nearly 60% from this year's peak.
Buoyed by large reserves and a balance of payments surplus, Singapore played a role in defending the Far East, bolstering the Thai baht and the Indonesian rupiah. When Indonesia's President Suharto revealed that Singaporean Prime Minister, Goh Chok Tong, had offered $10bn help, economists were surprised. The sum represented a seventh of Singapore's total currency reserves.
A once booming area - now in deep economic trouble
The Indonesian rupiah hit a record low against the dollar in August, and in September delayed major projects. In October it asked the IMF for help. A $40bn package is being arranged along with the liquidation of 16 unhealthy banks. Jakarta has agreed to tighten its belt, and to proceed with economic deregulation, including government spending cuts and much stricter budget discipline, along with further privatisation, including - eventually - the state-owned banks.
The peso came under pressure from early summer, and the central bank announced it was going to let it float in a wider band against the dollar. In July, however, the IMF announced an aid package of almost $1.1 billion. In September the peso fell to a record low. Michel Camdessus, IMF managing director, said the Philippines had been less damaged than other south-east Asian countries but would need to continue strengthening its financial sector to avoid further difficulties.