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Wednesday, July 1, 1998 Published at 14:08 GMT 15:08 UK


Business: The Economy

Meltdown in Asia - part 4: chronology of a crisis


The Asian crisis began in Thailand and soon spread to other Asian countries linked to the dollar. Eventually it spread to affect currencies and stock markets worldwide. Here are some of the key dates.

July 2, 1997: Thailand devalues the baht

As rumours spread that Japan would raise interest rates, investors move out of weaker currencies. The first to be affected is the Thai baht. With limited reserves, the Thai central bank soon runs out of dollars. The currency is devalued by 20% as the government asks the IMF for assistance.

July 11, 1997: Philippine peso devalued

The Philippine government is the next to feel the pressure of the currency markets as the peso is devalued and the IMF is called in. A rescue package of $1.1bn is agreed a few days later.

July 24, 1997: Asian currencies collapse

The currency crisis spreads thoughout Southeast Asia as the Thai baht, the Malaysian ringgit, the Philippine peso, and the Indonesian rupiah all come under renewed pressure.

August 14, 1997: Indonesian rupiah plunges

Indonesia is forced to abandon its fixed exchange rate against the dollar, and the rupiah drops dramatically on currency markets.

October 8, 1997: Indonesia asks IMF for assistance

Indonesia is forced to ask the IMF for assistance to stablise its currency and restore the confidence of international markets. It eventually receives nearly $40bn.

October 20-23, 1997: Hong Kong stock market panic

The Hong Kong stock markets loses one quarter of its value in four days over fears that the Hong Kong dollar will not be able to maintain its fixed peg to the dollar.

Oct 27, 1997: Panic spreads to Western stock markets

The Dow Jones Industrial Average plunges 554 points, its largest one-day loss, on fears that the Asian crisis will hit US companies.

November 17, 1997: Korean won collapses

South Korea abandons the defense of the won, which collapses to 1,000 to the dollar; the government calls for IMF assistance.

December 4, 1997: Korea gets IMF bail-out

The IMF gives approval for its largest bail-out yet, a $21bn loan as part of a package that eventually totals $60bn.

January 12, l998: Peregrine goes bust

Peregrine, Hong Kong's largest independent investment bank, goes bankrupt as a result of bad debts to Indonesian companies run by relatives of President Suharto. Stock markets in Hong Kong and China fall.

January 22, 1998: Rupiah falls to lowest level ever

The Indonesian currency reaches an all-time low against the dollar over scepticism about the commitment of the government to reform. The central bank intervenes to pull the currency back from 17,000 to 11,800 to the dollar, but Indonesia suspends debt repayments a few days later.

January 28, l998: South Korea restructures debts

Seoul agrees with private foreign banks the roll-over of $24bn in short-term credits into longer term loans of 1-3 years.

February 14, 1998: IMF and Indonesia clash

Indonesia's plan for a currency board to stablise the rupiah at a fixed rate draws the ire of the IMF, which threatens to end its financial support. One month's payments are eventually held back.

April 1, 1998: Japan begins liberalising financial markets

Japan begins its "big bang" aimed at opening its financial markets to Western competition. Markets should be "free, fair and global." Yen begins slide against dollar.

May 11, 1998: India nuclear blasts spook markets

India's nuclear tests, and subsequent ones by Pakistan, hit South Asian markets and currencies as the US and Japan impose sanctions.

May 21, 1998: Suharto resigns after riots

The Indonesian government falls after riots sweep through Jakarta and other major cities. The new president, B.J. Habibe, pledges economic and political reform.

June 17, 1998: US intervenes to rescue the yen

The US government intervenes in foreign currency markets for the first time to boost the yen, which has fallen to an eight year low against the dollar at ¥146.

June 26, l998: Major Japanese bank merger

The Long Term Credit Bank of Japan, the 22nd largest in the world, is in merger talks with Sumitomo Trust Bank, to stave off a collapse.


Meltdown in Asia:
  • The origins of the crisis;
  • its worldwide impact ; and
  • the lessons to be learned.



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