The 1997 Asian Financial Crisis: The Collapse of Exchange Rate Stability

The 1997 Asian financial crisis represents the most severe test of the so-called “Asian economic miracle”. Beginning with the sudden devaluation of the Thai baht in July 1997, the crisis rapidly covered Indonesia, Malaysia, the Philippines, the Republic of Korea, and other nations, escalating from a regional financial disruption into a global economic event. This article examines three central dimensions of the crisis — the mechanism of currency speculation, the structural problems of external debt, and the institutional vulnerabilities of the “rapid growth model” — through the lens of contemporary economic analysis. Statistical analysis demonstrates that in the most severely affected countries, currencies depreciated by 40–83%, real GDP contracted by 5–13%, and equity market indices declined by 50–75%. The International Monetary Fund (IMF) and the international community extended assistance packages exceeding USD 118 billion to Thailand, Indonesia, and the Republic of Korea. The concluding section addresses the institutional and policy lessons derived from the crisis and its enduring impact on the architecture of international finance.